State Bank of Pakistan
SBP TASK FORCE REPORT ON
CROP LOAN INSURANCE
FRAMEWORK
Agricultural Credit Department
State Bank of Pakistan
State Bank of Pakistan
ACKNOWLEDGEMENTS
The task of formulating a Crop Loan Insurance Framework was
challenging, particularly when it has been long overdue and many efforts in
the past remained unfruitful coupled with limitations of market based
scheme without any government subventions, subsidies or interventions.
However, I am pleased that the Task Force in collaboration with SBP, SECP,
MINFAL, PARC, insurance companies, banks and other stakeholders has
accomplished the task and came out with a workable, commercially viable
and sustainable solution. It is indeed a pride that the scheme will not only
facilitate borrowers of farming community and banks but will also pave the
way for adoption of the crop insurance scheme for the non borrower farmers.
I would like to acknowledge the valuable contribution and support
provided by members of the Task Force and its Working Group including
representatives of private insurance companies, MINFAL, SECP, PARC,
farming community and banks that helped in accomplishing the gigantic
work of developing crop loan insurance framework.
I hope that the successful implementation of scheme will prove to be a
corner stone in improving the access of agri. credit to the farming community.
Dr. Shamshad Akhtar
Governor
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SBP Task Force Report on Crop Loan Insurance Framework
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ABBREVIATIONS
ABL
Allied Bank Limited
ADBP
Agriculture Development Bank of Pakistan
CLIS
Crop Loan Insurance Scheme
HBL
Habib Bank Limited
IAP
Insurance Association of Pakistan
MINFAL
Ministry of Food, Agriculture & Livestock
NBP
National Bank of Pakistan
NICL
National Insurance Corporation Limited
NJI
New Jubilee Insurance Limited
PARC
Pakistan Agriculture Research Council
PPCBL
Punjab Provincial Cooperative Bank Limited
SBP
State Bank of Pakistan
SECP
Securities & Exchange Commission of Pakistan
UBL
United Bank Limited
ZTBL
Zarai Taraqiati Bank Limited
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SBP Task Force Report on Crop Loan Insurance Framework
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TABLE OF CONTENTS
SR. #
ITEM
PAGE
1
PREAMBLE
1
2
CROP INSURANCE – GLOBAL
PERSPECTIVE
3
3
TYPES OF INSURANCE
PRODUCTS
9
4
ROLE OF GOVT. IN CROP
INSURANCE
12
5
SBP TASK FORCE
13
6
CROP LOAN INSURANCE
FRAMEWORK
16
7
8
CONCLUSION &
RECOMMENDATIONS
ANNEXURE
20
21
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SBP Task Force Report on Crop Loan Insurance Framework
State Bank of Pakistan
1.
Preamble
In line with the Government’s priority to develop agriculture sector, SBP has
been endeavoring since its inception to ensure credit availability to meet the
credit needs of the farming community. Notwithstanding the robust increase
in agricultural credit disbursement from Rs 39 billion in 1999-2000 to Rs 212
billion in 2007-08, banks are still reluctant in adopting agricultural financing
as viable business line mainly due to the nature of agriculture sector
business.
Agriculture is very much vulnerable to the unpredictability of nature. With
agricultural production representing the only livelihood for many resource
constrained Pakistani farmers, the impact of natural disasters and other
agricultural risks cannot be taken lightly. In case of natural calamities, the
farmers not only have to bear the loss of their produce/crop but also have to
face defaults for the bank credit. The need to safeguard the interests and
investments of farmers is, therefore, of paramount importance.
Crop insurance is a risk management mechanism designed to even out
agricultural risks and blunt the consequences of natural disasters to make
losses, especially to the marginalized farmers, more bearable. In countries
having multiple-risk insurance schemes, government’s intervention or its
heavy support to agricultural insurance operations has been regarded
justifiable and inevitable due to the market failures. Such support has been
provided in the form of subsidies on premium to farmers, operational
subsidies to private insurers to cover some of the high administrative costs
associated with agricultural insurance contract underwriting and subsidized
reinsurance.
The method of government intervention also varies from country to country.
For example, in Canada, Japan and Philippines, the insurance schemes are
operating under a central government or local government body, while in
United States, Spain and Mexico they are operated under a partnership
between government and private insurance companies with the former
assuming the role of reinsurer of the latter. In India, governments allows
50% subsidy in premium to small & marginal farmers. WTO’s regulations
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also support subsidization of crop insurance premiums by the governments.
However, the government support programs are often fiscally burdensome.
Rationale
The introduction of crop insurance in Pakistan has been under consideration
since 1947. A number of committees constituted by the government had
deliberated and reported on the subject from time to time which inter alia
includes: • ADBP Pilot Project with a private Insurer – 1986-1988
• Various proposals by ADBP
• IAP Crop Insurance Scheme – 1990
• IAP Catastrophe Crop Insurance Scheme to SBP – 1990
• IAP Crop Insurance Scheme (Flood/Excessive Rain only) – 1996
• NIC Comprehensive Crop Insurance Scheme – 1996
All the past schemes with the exception of the earliest ADBP scheme had the
characteristics of pilot projects with limited risks; insurance for specified
crops and specified areas; Government subsidies in sharing of premiums or
through reinsurance for the programs and high premium rates.
Some individual experts have also examined the issue. It has been their view
that crop insurance would serve as a powerful instrument in promoting and
adopting modern techniques in agriculture especially by small farmers.
However, despite doing exhaustive exercises spanning nearly three decades,
our economic and agricultural experts are still looking for a model Crop
Insurance Scheme for Pakistan, while India and Sri Lanka had actually been
insuring the crops of their farmers for decades.
SBP is striving for financial inclusion of rural and farming community.
However, the banks who are operating under market based system find it
difficult to size up their agri. credit portfolio as agriculture is prone to risks of
natural calamities that inflict the risks of losses to the agricultural borrowers
& repayments of banks loans and its mitigate in the form of crop insurance is
not available in the country.
In order to mitigate the risk of losses happened to agricultural borrowers due
to natural calamities and risks of defaults to banks by such borrowers,
Governor SBP formulated a Task Force on Crop Loan Insurance
Framework in July, 2006 comprising of all stakeholders for development of
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a commercially viable and sustainable Crop Loan Insurance Scheme with the
help of all stakeholders. The Task Force has been working since it met on 3rd
October, 2006 for the first time. Task Force members held various meetings
and formulated working group. SBP provided various data series on agri.
credit disbursements including recoveries, write-offs, NPLs, crop & district
wise and yield per acre information to facilitate insurance companies in
development of crop loan insurance framework. After detailed deliberations
and discussions, a framework has been finalized and largely agreed upon by
banks, representatives of farming community and insurance companies.
NICL also used SBP Task Force’s Crop Loan Insurance framework and have
already announced a crop insurance scheme. Some of the banks and
insurance companies are negotiating their arrangements to facilitate their
agricultural borrowers by providing crop loan insurance.
The report is aimed at disseminating details of the work carried out by the
Task Force to the stakeholders. Section 2 provides some international
practices on crop insurance followed by types of crop insurance products
given in Section 3 and role of government in crop insurance provided under
Section 4. Section 5 elaborates on the proceedings of Task Force and its
working groups. Details of the framework are given in Section 6, and
conclusion/recommendations have been provided in its last section.
2.
Crop Insurance – Global Perspective
Risk management is of crucial importance in the investment and financing
decisions of farmers in developing countries and in transition economies.
Agricultural insurance, although one of the most often quoted tools for risk
management, can only play a limited role in managing the risks involved in
farming. The applicability of insurance in any given situation is based on
consideration of whether it is a cost-effective means of addressing a given
risk. In practice, agricultural insurance is almost invariably adjunct to a
whole set of risk management measures, of which adequate farm
management practices constitute an important element.
There have been many attempts to establish crop insurance programs in
developing countries. A few of them have succeeded in laying the foundation
for a sustainable risk management service. But there have also been many
failures. Most of such programs that did not prove durable were set up on the
basis of unrealistic expectations. A crop insurance brief on various countries
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experiences is give below which illustrates the types of situations where
insurance is used or being considered as a risk management mechanism
involving a variety of both farming systems and agricultural enterprises.
a. Argentina
This country has many features of a developed agriculture, and therefore it is
not surprising that some 25 percent of its total crop area is insured – mostly
against hail damages - although a start has been made to introduce multiperil policies. Concerned crops include soybean, wheat, sunflower and maize.
Insurance on grapevines and other fruits is also important.
As the agricultural insurance business is considered competitive, some 25
companies and mutual entities operate in this area. Some of them have
invested significantly in technical expertise. For example, one company
having about 12 percent of the market share employs eight fulltime
agriculturists in order to have an in-house team, both to design policies and
to manage insurance products being sold.
On the other hand, however, very few (9%) of the surveyed farmers, had crop
insurance. Lack of affordability, lack of information and general distrust were
cited as reasons for not having contracted insurance by those farmers. In the
1980s, farmers were obligated to purchase insurance from a government
parastatal with the loans they received from the public agricultural bank,
BANRURAL. Repeated difficulty in receiving insurance payments, however,
left farmers distrustful of insurance initiatives. Lack of guarantees and the
high insurance premiums are the principal problems for small farmers.
b. Brazil
This major agricultural producing country has had a crop insurance program
subsidized by the government. This has undergone some serious problems,
originating from its desire to cover too much risk too quickly. The result was
that the insurer bearing the risk had insufficient understanding of that risk –
a major error for any branch of insurance.
The first national experience with crop insurance in Brazil occurred when
Decree Law 2168 created the National Crop Insurance Company in 1954.
Decree Law 73 also reorganized private insurance in Brazil and created the
National Council of Private Insurance. Furthermore, it created the Crop
Insurance Stabilization Fund within the administrative supervision of the
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Institute of Reinsurance of Brazil. This decree established the legal
foundations for crop insurance in Brazil. Through Resolution, the National
Council of Private Insurance approved regulations for an experimental crop
insurance program in 1970 in the state of Sao Paulo. Through Law 5969 in
1973, the federal government created the Program of Guarantee of
Agricultural Activities (or PROAGRO). The program established that the
program should be supervised by the National Monetary Council and
administered by the Central Bank. Besides the revenue from the premium
rates, the program was funded through resources allocated by the federal
budget, under the control of the National Monetary Council. The program
was not experimental and was intended to cover all crops in all states
financed under the National System of Agricultural Credit.
During its early years, PROAGRO experienced high loss ratios. In earlier
days severe losses in wheat and rice contributed to these ratios. Due to high
losses at the beginning some corrections were soon adopted, such as
compulsory participation, increases in premium rates, and voluntary
coverage of the 30 percent of basic production costs not otherwise insured.
There are a few positive features of PROAGRO which deserve mention. First,
financial institutions only started to lend to small-scale farmers in significant
volume when credit was insured under the system. PROAGRO extended both
supervised and unsupervised credit operations to medium-sized and smallsized farms. Second, in reducing farmers borrowing risks, PROAGRO has
contributed to the adoption of modern technologies and helped increase
agricultural production. Third, because credit insurance acts as a substitute
for collateral, PROAGRO has enabled financial institutions to lend to
landless farmers (tenants and sharecroppers). This is a very important
consideration in Brazil, given the size of this group of farmers.
c. Cyprus
The Agricultural Insurance Organization of Cyprus (OGA) was established
under an Act in 1977, following the earlier attempts to structure relief
payments to farmers affected by adverse climatic events. After investigation,
the format of a parastatal insurance corporation was adopted. A wide variety
of crops are covered, against a range of perils like cereals against draught,
rust and hail; deciduous fruits against hail and grapes & citrus against frost
and hail.
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The loss ratio has a strong variation over time due to the high volatility of
natural disasters. Reinsurance and public support become essential
conditions. There is continuous demand from growers to extend the range of
risks covered, especially windstorm, excessive rain and excessive heat. The
OGA employs professional agriculturists, both for product development and
for supervision of loss assessment.
d. India
The crop insurance scene in India is two-pronged. One is a government
program (National Crop Insurance Scheme India – Annexure-A) that has a
strong social objective and loses vast sums each year. The government allows
50% subsidy in premium to small & marginal farmers. The claims are around
three-folds of the premiums. As such, officials are considering to re-design
this program, in order to make it more efficient and sustainable. On the other
hand, a few insurance companies are active in offering commercially sound
insurance products, especially to producers of high quality fruits, and much
developmental work is being done in India on new products and approaches,
following actuarially sound underwriting practices. The General Insurance
Corporation (GIC) of India has formed a specialized subsidiary, Agricultural
Insurance Corporation (AIC) in order to provide an institutional focus for this
class of business.
Learning from Indian Model revealed the following: Pilot Crop
Insurance
Scheme 1979 –
Comprehensive
Crop Insurance
Scheme 1985 -99
National
Agriculture
Insurance Scheme
2.1%
2.1%
All claims in excess of
100% to be shared at
5 - 10%
1 - 2%
1.5 - 3.5%
0.627 million
76.30 million
78.98 million
Premium generated
IR 19.7 million
IR 4.04 billion
IR 23.27 billion
Claims
IR 15.7 million
IR 23.19 billion
IR 72.18 billion
Claim Ratio
N.A.
575%
322%
Burning Cost
N.A.
9.29%
9.55
Types
Risk Sharing b/w
GIC & State
Insurance Premium
Farmers Covered
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e. Malaysia
Malaysia formed a National Task Force on Agricultural Insurance in 1985
through the Malaysian Insurance Industry Association to plan, co-ordinate,
monitor, and evaluate the implementation of a crop insurance program.
Malaysia’s agricultural sector combines large-scale plantation enterprises
with large numbers of small-scale producers. Both types have access to crop
insurance, but the larger scale farms are more likely to buy insurance. Cover
is available for oil palm, cocoa, rubber, for several species of timber trees, as
well as for tropical fruits such as durian, mango and mangosteen.
As with many other countries, the Malaysian experience with crop insurance
has been mixed, but companies are taking a professional attitude to
understanding the risks and to the design policies accordingly. A new
initiative is a possible pool of commercial insurers to develop insurance for
paddy rice.
f. Mauritius
A parastatal agency, the Mauritius Sugar Insurance Fund (MSIF) was
established some 50 years ago in order to provide protection to the island’s
sugar farmers against losses from cyclones. As experience has been gained,
and staff trained, this program has gradually taken on the coverage of other
risks. For example, fire and excessive rain and losses from yellow spot
disease (only in conditions of excessive rain).
There are crop insurance programs in Mauritius and Chile provided by the
private sector on a commercial basis. However, they are both relatively new,
and it is too soon to determine whether they will survive without government
subsidies.
The program has also developed a sophisticated method for rewarding
growers whose claims experience has been good for the insurer. All growers
are placed, for each insurance/growing season, somewhere on a 100 point
scale. Their position on this scale determines the level of premium to be paid,
and the indemnity level they will receive in the event of a claim for that
insurance period. The scale is dynamic, with movements up and down being
dictated by claims experience.
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g. Philippines
Some 22 cyclones, on average, strike the Philippines each year, and out of
these four cause significant damages. The northern and central parts of the
county are more affected than the south, where main perils for farmers are
drought and pests. The present crop insurance program grew out of an
agricultural guarantee fund, which was operated by the Land Bank of the
Philippines, the principal government bank servicing the agricultural sector.
The insurance is operated by a parastatal entity, the Philippines Crop
Insurance Corporation (PCIC), which began business in 1981, after a three
year preparatory period.
Designed initially to provide risk management to borrowing farmers and
their lenders, PCIC also offers policies to self-financed farmers. Participation
in insurance is compulsory for farmers in the higher-potential agricultural
areas for two crops viz. maize and rice. This element of compulsion has not
resulted in a negative reaction by growers because the premiums paid to
PCIC, are heavily subsidized, by the government and by institutional lenders,
therefore, farmers pay only a proportion of these amounts.
Agricultural insurance is a government program that provides insurance
protection to agricultural producers against loss of the crops, livestock and
agricultural assets on account of natural calamities, plant pests and disease
and/or other perils. The Philippine Crop Insurance Corporation (PCIC) is
directly responsible for its implementation.
h. Syria
The Syrian government has investigated introducing crop insurance, and is
still undecided as to whether to direct the state-owned insurance company, a
monopoly insurer, to develop and market crop policies.
A major constraint to the introduction of crop insurance is that the most
important peril by far is drought. As is well known, drought is perhaps the
most difficult peril to include in any insurance cover, especially in the early
years of a program, when procedures are still being developed, and when staff
are gaining experience.
The Syrian position illustrates a classic dilemma that has fairly general
applicability in arid and semi-arid countries. Officials understand that
drought will be difficult to include at the start of any crop insurance program,
yet are well aware that unless insurance products cover this peril, then there
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will be a very negative reaction from farmers. This may justify investigating
the applicability of one of the new developments in crop insurance, namely
index (coupon) insurance products.
3.
Types of Insurance Products
a. Classic Crop Insurance Products
These crop insurance products account for by far the bulk of all crop
insurance written globally. There are two main types, damage-based and
yield-based products respectively. Details are given below.
i. Damage-based Products
Insurance against crop losses from hail have been insured for more than 200
years. This type of crop insurance still accounts for a considerable proportion
of crop insurance worldwide. Hail policies are based on a measure of the
actual damage which results due to hail. Other named-peril policies, such as
those for frost and fire, are very similar to hail cover in essentials. The key
features are:
• Damage resulting from the peril is localized;
• low degree of correlation of risk over a given area;
• sum insured is agreed when the policy is purchased;
• loss adjustment and eventual indemnity based on measurement of the
percentage of damage after the incidence of the loss event;
This type of insurance is not suitable for perils which can impact over wide
areas, e.g. drought, pest, disease.
ii. Yield-based Products
Yield-based or Multi-peril crop insurance (MPCI) products have the defining
characteristic that insurance is geared to a level of expected yield, rather
than to the damage that is measured after a defined loss event. Other
features are:
• MPCI policies are suited to perils the nature of which mean that their
individual contribution to a crop loss is difficult to measure;
• similarly these yield-based policies are suited to perils which impact over
a period of time;
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• establishing a farmer’s yield history provides the basis for determining
the percentage of shortfall after a loss event;
• the yield is measured at harvest; insured yield may typically be in the
range of 50 to 70 percent of historic average yield;
• yield shortfall may be determined on either an area or individual farmer
basis.
b. New Crop Insurance Products
The dynamism of research and development into new methods of managing
risk through insurance mechanisms revealed two fairly new types of
products. These are (i) products based on insuring a level of crop revenue,
and (ii) products where insurable damage is determined on the basis of an
index derived from data external to the insured farm itself.
i. Crop-revenue Insurance Products
The essence of this product is to combine production and price risk, the
combination of production and price being the determinants of gross revenue
from a given crop. Under normal supply/demand conditions a production
shortfall might be expected to result in a rise in price. To some extent such a
rise will cancel out the financial loss for the grower who suffers a production
shortfall. But this will only be the case if he harvests sufficient crop and sells
it at sufficient premium over the expected price. Crop-revenue insurance is
designed to meet any remaining shortfall in revenue from crop sales.
Frequently, too, crop-revenue products involve the determination of loss on
an area basis, introducing important economies in the loss assessment
process.
At present crop-revenue products are marketed mainly in North America,
where they first became available to all corn and soybean growers in Iowa
and Nebraska in 1996. Here their use is facilitated by commodity markets
being highly developed and by related information being reliable and readily
available. In this connection it is important that the price element of the
policy be market based, that is, on futures prices for the coming season. The
alternative, to use some sort of target price, could lead to a distortion of
supply. Furthermore, it is unlikely that a crop revenue product based on a
target (i.e. non-market price) would find underwriting support.
Crop-revenue products define the insurable interest as an income stream
rather than as the intrinsic value (or expected value) of the biological item at
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risk. This redefinition leads readily to a consideration of farm loan and
insurance linkages, since the servicing of interest and principal payments on
an agricultural loan depend on the income stream produced. Some crop
insurance programs have been administratively arranged so that the
insurance element is made a part of the loan, with the bank being the first
recipient of any indemnity paid by the insurer, while the premium is a
working capital item that is packaged with the loan itself. A more recent
development is that some banks are believed to be interested in direct
coverage of portions of their loan portfolios, more particularly for catastrophic
losses following a systemic peril.
ii. Whole-farm Insurance
This insurance product offers coverage on a whole-farm basis rather than on
a crop-by-crop basis. The whole-farm insurance product was first introduced
in 1999 in United States as Adjusted Gross Revenue (AGR), an expansion of
revenue insurance. AGR provides protection against low revenue due to
unavoidable natural disasters and market fluctuations that occur during the
insurance year.
iii. Index-based Insurance Products
In a classic crop insurance policy, evidence of damage to the actual crop on
the farm, or in the area of the farm, is needed before an indemnity is paid.
But verifying that such damage has occurred is expensive, and making an
accurate measurement of the loss on each individual insured farm is even
more costly. An index (also known as ‘coupon’) policy operates differently.
Index-based crop insurance is a very new product. It has only started recently
in a small way in a few parts of the developed world. With an index policy a
meteorological measurement is used as the trigger for indemnity payments.
These damaging weather events might be:
• a certain minimum temperature for a minimum period of time;
• a certain amount of rainfall in a certain time period - this can be used for
excess rain and also for lack of rain (drought) cover;
• attainment of a certain wind speed - for hurricane insurance.
The classic insurance policy is replaced with a simple coupon. Instead of the
usual policy wording, which would give the indemnity, or range of indemnity
levels, on say a per hectare basis for a given crop, for losses from specific
causes, the coupon merely gives a monetary sum which becomes payable on
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certification that the named weather event, of specified severity, has
occurred. The face value of the coupon may be standard, to be triggered once
the weather event has taken place for the area covered. Alternatively it could
be graduated, with the value of the coupon then being proportional to the
severity of the event.
A trigger such as this cannot be used for certain perils, such as hail, where
the adverse event normally impacts on a very limited area of land. On the
other hand, it is suited to weather perils which impact over a wide area, for
example drought.
Since there is no direct connection between a farming operation and the
coupon, even those without crops at risk could theoretically purchase risk
cover of this type. This is not a disadvantage. On the contrary, there are
many persons besides farmers who stand to suffer financial losses from
adverse weather events. Fishermen, tourist operators, outdoor vendors are
among the many categories making up the potential clientele for index
insurance products.
4.
Role of Govt. in Crop Insurance
One of the policy-making priorities of governments is to facilitate trade. For
most developing countries, agricultural exports are important and vital,
therefore, WTO’s regulations also support subsidization of crop insurance
premiums by the governments. They are considered as falling into the ‘Green
Box’ of measures by which a government can support its producers. Whereas
this development is still relatively new, the commercial insurance industry
has experienced an upsurge in demand for information, from governments, on
crop insurance. The nature of these enquiries makes it clear that they are
prompted by awareness of this apparent avenue for permitted assistance to
the farming community.
There are several types of assistance by which a government can facilitate
crop insurance. Among these are the following:
• Provision of information, on weather patterns, incidence of perils,
evidence of past losses following adverse weather events, numbers, areas
and locations of farms/crops, historical crop yields (data and trends).
Most countries do this on a regular basis. Some charge for information.
The quality of the data varies greatly.
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• Meeting the costs of the research needed before any crop insurance
program can be started. Often this responsibility is shared by
development organizations such as FAO - e.g. in the case of Pakistan in
1995 and Syria in 2000, and the World Bank - e.g. in the case of Morocco
in the late 1990s.
• Subsidization of premiums payable by farmers. This is very common,
with Canada, Cyprus, India, Japan, the Philippines and the United
States being examples.
• Providing a layer of reinsurance. Although less common than premium
subsidy, it is practised, for example, in the United States, Cyprus and
India.
5.
SBP Task Force
The introduction of crop insurance is a long outstanding issue and many
schemes were developed in the past by the Government and insurance sector,
however, none of them could be materialized. Non-availability of crop
insurance is also one of the major impediments in access to credit to farmers.
Therefore, in order to enhance the flow of agri. credit to the farming
community and to mitigate the risk of losses to farming community caused
due to natural calamities which also affect the repayment of bank loans, SBP
has constituted a Task Force comprising the following. Chairman: Mr. Zakir
Mahmood, President HBL.
• Representatives of Agricultural Credit Department, SBP
• Representative of Securities Exchange Commission of Pakistan
• Representative of Ministry of Food, Agriculture and Livestock
• Representative of Pakistan Agriculture Research Council
• Representatives of Leading Commercial Banks: NBP, HBL, MCB, UBL,
ABL, Askari Bank, Bank Al-Falah, Bank of Punjab, ZTBL and PPCBL
• Representatives of Insurance Association of Pakistan
• Representatives of Provincial Chambers of Agriculture
(Complete list of the representatives of insurance companies, farmers
associations, banks and other is attached at Annexure-J).
In the first meeting of the Task Force held on 3rd October 2006, it was
proposed by the representatives of the farming community that at first stage
the framework for the introduction of crop loan insurance need to be
developed to facilitate the borrows of banks in case of losses due to natural
calamities. Therefore, it was unanimously agreed that the scope of the Task
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Force would be confined for development of crop loan insurance scheme which
will provide the insurance cover to the extent of loan amount and not to the
full value of crop.
a. Sub-committee/ Working Group
For focused discussions and deliberations, a sub-committee was constituted
comprising of major bankers, MINFAL and representative of Insurance
Association of Pakistan. The sub-committee had two meetings and reviewed
the existing crop loan insurance schemes being offered by East West
Insurance Companies through The Bank of Punjab and Askari Bank Ltd,
respectively. The findings of the sub-committee were as under: • All previous programs could not be materialized due to little involvement
of private insurance companies.
• The experience of the two companies with two banks who have piloted
the crop loans insurance in the country can facilitate the other insurance
companies for development of their specific products to participate in the
scheme.
• Agricultural credit disbursement data, rate of recovery, crops involved,
banks write offs/waivers due to natural calamities, agri. Non Performing
Loans, data about calamities declared by provincial governments etc.
would need to be analyzed
Therefore, the sub-committee decided that a Working Group comprising of
leading private insurance companies including EFU, Adamjee, NJI, UBL
Insurers, East West and United Insurance companies and banks including
UBL, Askari and NBP be formed in addition to representative of SBP to
liaison/ coordinate.
The insurance companies of the Working Group were assigned to review the
existing systems of agricultural credit, crop loan insurance being offered and
other modalities and pre-requisites of the crop loan insurance scheme
including reinsurance arrangements. The banks and SBP were required to
facilitate the insurance companies in all respects.
Accordingly, SBP has provided the following data to the Working Group to
facilitate the development of draft crop loan insurances scheme.
• Consolidated information/data about the province wise calamity
announcements by the government during last 5 to 10 years containing
the details in terms of Notification No., District, Tehsil / Taluka, no of
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SBP Task Force Report on Crop Loan Insurance Framework
14
State Bank of Pakistan
villages, reason and crop season of all provinces. (Annexure-B). Summary
of the same is as under: Punjab
70 calamity
affecting
10,000
villages.
Sindh
10 calamity
declarations
affecting 30
districts, 84
talukas/
tehsils.
NWFP
Balochistan
22 calamity
declarations
affecting 81
districts, 500
talukas/ tehsils.
The province
remained under
drought for almost 7
years.
• Crop wise position of Agri Loans disbursements and recoveries by banks
• Data on yield of major crops
• District wise Agri credit data from 2002-03 to 2005-06 regarding: o Disbursement
o Recovery
o Outstanding of crop production loans of banks from 2002-03
through 2005-06
• Agricultural Non Performing Loans & loans write-off and waived by
banks
• 10 years data on the relief provided by the ZTBL to its borrowers on
account of calamity
b. Re-insurance
Very limited re-insurance is available in crop insurance sector. The insurance
companies of the Working Group had detailed negotiations with M/s
Hannover Re of Germany with their office at Malaysia. Hannover Re, with a
gross premium of around 8 billion euro, is one of the leading reinsurance
groups in the world. It transacts all lines of non-life & life and health
reinsurance including crop reinsurance and maintains business relations
with more than 5,000 insurance companies in about 150 countries. Its
worldwide network consists of more than 100 subsidiaries, branch and
representative offices in around 20 countries with a total staff of roughly
1,800. The rating agencies most relevant to the insurance industry have
awarded Hannover Re very strong insurer financial strength ratings
(Standard & Poor's AA- "Very Strong" and A.M. Best A "Excellent").
M/s Hannover Re has also provided re-insurance to East West Insurance
companies, however, the arrangements were of limited nature. As per
requirement of the re-insurers further data on yield of major and minor crops
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
15
State Bank of Pakistan
was also obtained from MINFAL by SBP. Banks Working Group provided its
specific disbursements for crop production and recoveries there against.
6.
Crop Loan Insurance Framework
In spite of various initiatives taken in the past to introduce crop insurance,
no fruitful result could be come out mainly due to little involvement of
private sector insurance companies and non-availability of reliable data on
calamities, cropping pattern, etc. As such, the risk of losses of natural
calamities to farming community remained without insurance cover and also
banks considered agri. credit a high risk and non-viable business which
hampered the expansion of credit to the farming community. Therefore, in
order to improve access to credit to the farming community especially to the
small farmers, SBP initiated the task of development of crop loan insurance
framework with the help of stakeholders.
The member insurance companies of the Working Group reviewed the
existing structure of agri. financing and various schemes and products of
agricultural production loans with the objective of perspective risk portfolio
and size of the business to develop a workable market based insurance
framework. The biggest challenge was the acquisition of data on calamities,
district wise & crop wise agri. disbursements/recoveries, NPLs, cropping
cycles, etc. The required data was collected and compiled by SBP to facilitate
insurance companies in assessing potential risks and negotiating with
reinsurers abroad. Insurance companies also reviewed the crop loan
insurance schemes offered by two insurance companies viz. East West
Insurance and United Insurance to the agri. borrowers of The Bank of Punjab
and Askari Bank Ltd. respectively.
Based on the information provided by SBP, banks and negotiations with
reinsurers, a well structured & comprehensive framework was jointly
prepared by the member insurance companies of the Working Group. The
framework covered all dimensions of crop loan insurance which, inter alia,
include crops to be covered, insured risks, maximum sum insured per
borrower, maximum rate of premium, indemnities, etc. It was also suggested
that in order to save the time and efforts, the insurance companies could
jointly reinsure the entire portfolio of agri. crop production loans but the
suggestion was not supported by insurance companies as most of them have
developed their own products based on the SBP framework. However, Salient
features of the scheme (Annexure-C) are as under: ___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
16
State Bank of Pakistan
Table 6.1: SBP Task Force – Crop Loan Insurance Framework
Item
PARTICIPATION
AMOUNT
INSURED
CROPS
COVERED
PERIOD OF
INSURANCE
INSURED RISKS
DECLARATION
PREMIUM
INDEMNITY
REFERENCE
YIELD
MAIN
EXCLUSIONS
SPECIAL
CONDITIONS
Coverage
• ALL commercial & private banks and Insurers
registered with SECP
• Amount of loan subject to per acre borrowing limit
prescribed by SBP with maximum Rs 2,000,000 per
farmer per crop per season
• All field crops
• From time of sowing or transplanting till harvesting
• Excessive Rain, Hail, Frost, Flood, Drought and Crop
related diseases like viral and bacterial attacks or
damage by locusts
• Name of farmer and crop must be entered in the
Usher/Land Revenue/Jammabandi at the
Village/Deh/Chak level.
• Maximum 2% of amount insured per crop per season
plus applicable levies. Bank will be responsible for
collection and payment of premium to the Insurer
• Claims for damage directly caused by the Insured Risks
to be based on declaration of Calamity by the
competent authority (Provincial or Federal) in the area
where the insured risk is located and such declaration
is notified in the Gazette AND the final yield of the
subject risk is less than 50% of the reference of that
area.
• Indemnity is also subject to the name of
farmer/borrower and the insured crop has been earlier
declared.
• Three year average yield of the particular area. The
three years will be from the five preceding years
discounting the best and worst years.
• War, Civil war, Strikes, Riots, Terrorism etc
• Non-utilization or wrong utilization of loan.
• Earthquake or Volcanic eruption
• Loss before risk declaration or after harvesting
• Price fluctuations and loss of market
• Declaration of Calamity
• The maximum limit of liability of the Scheme in any
one year to be 300% of the Premiums for that year
• Insurers reserve rights for review of terms annually
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SBP Task Force Report on Crop Loan Insurance Framework
17
State Bank of Pakistan
The draft scheme was largely agreed upon by the members of the Task Force
and it was decided that the scheme would be presented to the Governor SBP,
and once the scheme was finalized, issues of premiums, making scheme
mandatory for the borrowers of banks and other operational modalities would
be decided by banks and insurance companies as per their policies.
It was also recommended by the Task Force that as the framework was
developed with limitations of historical data and past trends of calamities,
losses, cropping patterns, farming practices for various crops, etc, therefore,
the framework would regularly be reviewed and revised based on the
experiences of the insurance companies, banks and farming community.
Further, crop loan insurance being a totally new domain/ discipline in the
country (Pakistan) required to establish infrastructure or basis from very
beginning or foundation stage of the scheme. This also necessitated
development of a strong database regarding district-wise/ area-wise crop
pattern, yield, rain fall index, loan default, use of fertilizers, use of pesticides
& weedicides, data regarding pests/ viral attacks (disease diagnosis) etc.
Insurance companies also needed to develop proper infrastructure and
network for the coverage of entire rural area of the country so that the crop
loan insurance facility (cover) could be should be offered (made available) to
all farmers/ borrowers at the same time, all over the country.
a. Presentation to the Governor
Working Group of Task Force made a presentation on the subject framework
to Governor, State Bank of Pakistan on 24th August, 2007 (Annexure-D)
which was attended by the CEOs/heads of leading insurance companies,
presidents of selected banks, Chairman NICL, agri. heads of banks and
representatives of ACD, SBP. While giving a brief historical background of
various pilot schemes / proposals developed in the past, it was cited that
despite being made many sincere efforts, no fruitful results thereof have come
out as yet. The past schemes / proposals had mainly characterized as pilot
projects with limited risks, insurance for specified crops & specified areas,
government subsidized reinsurance and schemes offered at high premiums.
Moreover, the current proposal is unique and distinct from all the previous
crop insurance schemes due to the following characteristics:
• The proposal is free from any sort of government subsidies either as
sharing of premium or risk assumption,
• The scheme will cover all Pakistan.
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SBP Task Force Report on Crop Loan Insurance Framework
18
State Bank of Pakistan
• The proposal is cost effective and affordable as the premium rate is only
up to 2% premium per crop as compared to 9 to 13% in the region.
• The scheme will cover all field crops in the country.
Thereafter, the international experience of crop insurance companies was
given which showed that crop insurance has been highly state-owned sector
and in most of the countries, crop loan insurance is mandatory, while the
experience of all the countries except a few developed economies is not
encouraging.
Very limited re-insurances are available. Further, the
administrative cost is high in crop loan insurance sector and there is a lack of
specialist knowledge.
The Governor, while appreciating the efforts of the Task Force, advised
insurance companies and banks to review the framework and ensure its
workability using empirical evidences, international modeling/practices and
market based premium rates based on actual losses/calamities before its
implementation.
b. Adoption of Framework by NICL
In the meanwhile, on the advice of the Governor, the Director, ACD had a
couple of meetings with Chairman, National Insurance Corporation Limited
(NICL) and shared SBP’s schemes & policies on agricultural credit and also
provided various data series on agri. loans compiled along with the draft
framework prepared by it. Further, Chairman NIC was also invited in the
presentation of Crop Loan Insurance Framework presented to the Governor
by Working Group of SBP Task Force.
Based on the information provided by SBP and SBP Task Force draft
framework, NICL launched its crop insurance scheme (Annexure-E) for the
borrowers of agri. loans of banks as well as to the selected farmers. The
Chairman, NICL vide his DO letter dated 12th June 2008 to the Governor,
thanked her cooperation, acknowledged the feedback of SBP and appreciated
the working of its Task Force which was subsequently adopted by NICL in its
crop loan insurance scheme (Annexure-F).
c. Adoption of Framework by Other Banks and
Insurance Companies
Some private insurance companies including New Jubilee Insurance and
Adamjee Insurance have also developed their crop loan insurance products
and a few major banks viz. NBP (Annexure-G), ZTBL, ABL and HBL are
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
19
State Bank of Pakistan
negotiating and finalizing operation modalities with public and private
insurance companies for the insurance of their crop loans to the farmers.
Incidentally, it may be mentioned that The Bank of Punjab and Askari Bank
Limited are already providing crop loan insurance to their borrowers in
collaboration with East West and United Insurance companies respectively
(Annexure-H & I).
7.
Conclusion & Recommendations
The key objective of the task force was to put in place a proper Crop
Loan Insurance Framework to have the banking community, the insurance
industry, borrower representatives, regulators and the Government together
to develop a common framework. The challenge before the SBP Task Force
was to convince the insurance industry to make concerted effort to develop a
workable and cost effective program for providing insurance cover. However,
after extensive discussions and detailed meetings, the insurance industry
convinced and developed a workable framework. Since major banks and
insurance companies have developed their crop insurance programs/ products
based on the framework developed by SBP Task Force and some of these
have already come to the market, the objective of the task force to develop
such a commercially viable and sustainable Crop Loan Insurance Scheme
(CLIS) that can be adopted by the market players viz. banks & insurance
companies have been accomplished. Thus, the SBP Task Force in its
concluding meeting held on 17th July, 2008 under the chair of the Governor,
SBP decided to launch the crop loan insurance from the forthcoming Rabi
crop of 2008 and banks may negotiate their terms, conditions and operational
modalities including rate of premium, making the scheme/crop insurance
mandatory to their borrowers etc. with any insurance company as per bank’s
policy and applicable rules and regulations.
**************
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
20
State Bank of Pakistan
Annexure
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
21
Annexure-A
National Crop Insurance Scheme (India)
Objectives:
The objectives of the scheme are as under: 1.
2.
3.
To provide insurance coverage and financial support to the farmers in the
event of natural calamities, pests & diseases.
To encourage the farmers to adopt progressive farming practices high value
in-puts and higher technology in Agriculture.
To help stabilize farm incomes, particularly in disaster years.
Salient features of the scheme: 1.
Crops covered:The crops in the following broad groups in respect of which i) the past yield
data based on Crop Cutting Experiments (CCEs) is available for adequate
number of years, and ii) requisite number of CCEs are conducted for
estimating the yield during the proposed season:
a. Food crops (Cereals, Millets & Pulses)
b. Oilseeds
c. Sugarcane, Cotton & Potato (Annual Commercial/annual Horticultural
crops)
Other annual Commercial/annual Horticultural crops subject to availability of
past Yield data will be covered in a period of three years. However, the crops
which will be covered next year will have to be spelt before the close of
preceding year.
2.
States and areas to be covered:
The Scheme extends to all States and Union Territories. The States/Uts opting
for the Scheme would be required to take up all the crops identified for
coverage in a given year.
Exit clause: The States/Union Territories once opting for the Scheme, will
have to continue for a minimum period of three years.
3.
Farmers to be covered:
All farmers including sharecroppers, tenant farmers growing the notified crops in the
notified areas are eligible for coverage.
The Scheme covers following groups of farmers:
a. On a compulsory basis: All farmers growing notified crops and availing Seasonal
Agricultural Operations (SAO) loans from Financial Institutions i.e. Loanee Farmers.
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SBP Task Force Report on Crop Loan Insurance Framework
22
Annexure-A
National Crop Insurance Scheme (India)
b. On a voluntary basis: All other farmers growing notified crops (i.e., Non-Loanee
farmers) who opt for the Scheme.
4. Risks covered & exclusions:
Comprehensive risk insurance will be provided to cover yield losses due to nonpreventable risks, viz.:
i) Natural Fire and Lightning
ii) Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Torando etc.
iii) Flood, Inundation and Landslide
iv) Drought, Dry spells
v) Pests/Diseases etc.
Losses arising out of war & nucler risks, malicious damage & other preventable risks
shall be excluded.
5. Sum insured /limit of coverage:
The Sum Insured (SI) may extend to the value of the threshold yield of the insured
crop at the option of the insured farmers. However, a farmer may also insure his
crop beyond value of threshold yield level upto 150% of average yield of notified
area on payment of premium at commercial rates.
In case of Loanee farmers the Sum Insured would be atleast equal to the amount of
crop loan advanced.
Further, in case of Loanee farmers, the Insurance Charges shall be an additionality to
the Scale of Finance for the purpose of obtaining loan.
In matters of Crop Loan disbursement procedures, guidelines of RBI/NABARD shall
be binding.
6. Premium Rates:
S
N.
1.
Season
Kharif
Crops
Bajra & Oilseeds
Other crops (cereals, other millets & pulses)
2.
Rabi
Wheat
Premium rate
3.5% of SI or
Actuarial
rate, which ever is
less
2.5% of SI or
Actuarial
rate, which ever is
less
1.5% of SI or
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
23
Annexure-A
National Crop Insurance Scheme (India)
Other crops (other cereals, millets, pulses &
oilseeds)
3.
Kharif Annual Commercial annual Horticultural crops
& Rabi
Actuarial
rate, which ever is
less
2.0% of SI or
Actuarial
rate, which ever is
less
Actuarial rates
Transition to the actuarial regime in case of cereals, millets, pulses & oilseeds would
be made in a period of five years. The actuarial rates shall be applied at
District/Region/State level at the option of the State Govt./UT.
7. Premium subsidy:
50% subsidy in premium is allowed in respect of Small & Marginal farmers to be
shared equally by the Govt. of India and State/UT Govt. The premium subsidy will be
phased out on sunset basis in a period of three to five years subject to review of
financial results and the response of farmers at the end of the first year of the
implementation of the Scheme.
The definition of Small and Marginal farmer would be as follows:
Small Farmer: A Cultivator with a land holding of 2 hectares (5 acres) or less, as
defined in the land ceiling legislation of the concerned State/UT.
Marginal Farmer: A Cultivator with a land holding of 1 hectare or less (2.5 acres).
8. Sharing of risk:
Risk will be shared by IA and the Govt. in the following proportion.
Food crops & Oilseeds: Till, complete transition to Actuarial regime in a period of five
years takes place, claims beyond 100% of premium will be bone by the Govt.
Therefore, all normal claims, i.e. claims upto 150% of premium will be met by IA and
claims beyond 150% shall be paid out of Corpus Fund for a period of three years.
After this period of three years claims upto 200% will be met by IA and above this
ceiling out of the Corpus Fund.
Annual Commercial crops/annual Horticultural crops: Implementing Agency shall
bear all normal losses, i.e claims upto150% of premium in the first three years and
200% of premium thereafter subject to satisfactory claims experience. The claims
beyond 150% of premium in the fist three years and 200% of premium thereafter
shall be paid out of Corpus Fund. However, the period of three years stipulated for
this purpose will be reviewed on the basis of financial results after the fist year of
implementation and the period will be extended to five years if considered necessary.
To meet Catastrophic losses, a Corpus Fund shall be created will contributions from
the Govt. of India and State Govt./UT in 50:50 basis. A portion of Calamity Relief
Fund (CRF) will be used for contribution to the Corpus Fund.
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
24
Annexure-A
National Crop Insurance Scheme (India)
9. Area approach and unit of insurance:
The Scheme would operate on the basis of ‘Area Approach’ i.e., Defined Areas for
each notified crop for widespread calamities and on an individual basis for localised
calamities such as hailstorm, landslide, cyclone and flood. The Defined Area (i.e.,
unit area of insurance) may be a Gram Panchayat, Mandal, Hobli, Circle, Phirka,
Block, Taluka etc. to be decided by the State/UT Govt. However, each participating
State/UT Govt. will be required to reach the level of Gram Panchayat as the unit in a
maximum period of three years.
Individual based assessment in case of localised calamities, would be implemented in
limited areas on experimental basis, initally and shall be extended in the light of
operational experience gained. The District Revenue administration will assist
Implementing Agency in assessing the extent of loss.
10. Seasonality discipline
a) The board seasonality discipline followed for Loanee farmers will be as under:
Activity
Kharif
Rabi
Loaning period
April to September October to Next March
Cut-off date for receipt November
May
of declarations
Cut-off date for receipt January/March
July/September
of yield data
The broad cut-off dates for receipt of proposals in respect of Non-loanee farmers will
be as under:
a. Kharif season: 31st July
b. Rabi season: 31st December
However, seasonality discipline may be modified, if and where necessary in
consultation with State/UT and the Govt. of India.
11. Estimation of crop yield:
The State /UT Govt. will plan and conduct the requisite number of Crop Cutting
Experiments (CCEs) for all notified crops in the notified insurance units in order to
assess the crop yield.
The state/UT Govt. will maintain single series of Crop Cutting Experiments (CCEs)
and resultant yield estimates, both for Crop Production estimates and Crop
Insurance.
Crop Cutting Experiments (CCE) shall be undertaken per unit area/per crop. On a
sliding scale, as indicated below:
S
Unit Area
Minimum number of
N.
C.C.E.s required to be
done
1. Taluka/Tehsil/Block
16
10
2. Mandal/Phirka/any other smaller unit area comprising
8-10 villages
3. Gram Panchayat comprising 4-5 villages
08
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
25
Annexure-A
National Crop Insurance Scheme (India)
A Technical Advisory Committee (T.A.C.) comprising representatives from N.S.S.O.,
Ministry of Agriculture (G.O.I.) and IA shall be constituted to decide the sample size
of CCEs and all other technical matters.
12. Levels of Indemnity & Threshold Yield:
Three levels of Indemnity, viz., 90%, 80% & 60% is corresponding to Low Risk.
Medium Risk & High Risk areas shall be available for all crops (cereals, millets, pulses
& oilseeds and annual commercial/ annual horticultural crops) based on Coefficient of
Variation (C.V.) in yield of past 10 years’ data. However, the insured farmers of unit
area may opt for higher level of indemnity on payment of additional premium based
on actuarial rates.
The Threshold yield (TY) or Guaranteed yield for a crop in an Insurance Unit shall be
the moving average based on past three years average yield in case of Rice & Wheat
and five years average yield in case of Other crops, multiplied by the level of
indemnity.
13. Nature of Coverage and Indemnity:
If the ‘Actual Yield’ (AY) per hectare of the insured crop for the defined area [on the
basis of requisite number of Crop Cutting Experiments (CCEs)] in the insured season,
falls short of the specified ‘Threshold Yield’ (TY), all the insured farmers growing that
crop in the defined area are deemed to have suffered shortfall in their yield. The
Scheme seeks to provide coverage against sucbcontigency.
‘Indemnity’ shall be calculated as per the following formula:
Shortfall in Yield
---------------------- x Sum Insured for the farmer
Threshold yield
{Shortfall = "Threshold Yield – Actual Yield’ for the Defined Area}
13A. Indemnity in case of localised risks:
Loss assessment and modified indemnity procedures in case of occurrence of
localised perils, such as hailstorm, landslide, cyclone and flood where settlement of
claims will be on individual basis, shall be formulated by IA in coordination with
State/UT Govt.
The loss assessment of localised risks on individual basis will be experimented in
limited areas, initially and shall be extended in the light of operational experience
gained. The District Revenue administration will assist IA in assessing the extent of
loss.
14. Procedure for approval & settlement of claims:
Once the yield data is received from the State/UT Govt. as per the prescribed cut-off
dates, claims will be worked out and settled by IA.
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
26
Annexure-A
National Crop Insurance Scheme (India)
The claim cheques along with claim partiuclars will be released to the individual
Nodal Banks. The Bank at the grass root level, in turn, shall credit the accounts of
the individual farmers and display the particulars of beneficiaries on their notice
board.
In the context of localised phenomenon, viz., hailstorm, landslide, cyclone and flood,
the IA shall evolve a procedure to estimate such losses at individual farmer level in
consultation with DAC/State/UT. Settlement of such claims will be on individual basis
between IA and insured.
15. Financial support towards administration & operating (A & O) expenses:
The A & O expenses would be shared equally by the Central Govt. & respective State
Government on sunset basis [100% in 1st year, 80% in 2nd year, 60% in 3rd year,
40% in 4th year, 20% in 5th year and ‘zero’ thereafter.]
16. Corpus fund:
To meet Catastrophic losses, a Corpus Fund shall be created with contributions from
the Govt. of India and State/UT. On 50:50 basis. A portion of Calamity Relief Fund
(CRF) shall be used for contribution to the Corpus Fund.
The Corpus Fund shall be managed by Implementing Agency (IA).
17. Reinsurance cover:
Efforts will be made by IA to obtain appropriate reinsurance cover for the proposed
RKBY in the international Reinsurance market.
18. Management of the scheme, monitoring and review:
In respect of Loanee farmers, the Bank shall collect the premium along with the
Declarations and send it to IA within the prescribed time limits. However, in areas
where IA has requisite infrastructure, a non-loanee farmer will have option to send
premium along with Declaration, directly to IA within the time limits.
Selection of the Banks will be on the basis of Service Area Approach (SAA) of RBI or
at the option of the Banks (Where co-operative banks have good network). The
Department of Agriculture, Agricultural Statistics, Directorate of Economics and
Statistics, Department of Co-operation, Revenue Department of the State
Government will be actively involved in smooth implementation of the Scheme.
The Scheme will be implemented in accordance with the operational modalities as
worked out by IA in consultation with Dept. of Agriculture & Co-operation.
During each crop season, the agricultural situation will be closely monitored in the
implementing State/UT. The State / UT Department of Agriculture and district
administration shall set up a District Level Monitoring Committee (DLMC), who will
provide fortnightly reports of Agricultural situation with details of area sown,
seasonal weather conditions, pest incidence, stage of crop failure {if any} etc.
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
27
Annexure-A
National Crop Insurance Scheme (India)
The operation of the Scheme will be reviewed annually, and modifications as may be
required would be introduced. Periodic Appraisal Reports on the Scheme would be
prepared by Ministry of Agriculture, the Government of India/Implementing Agency.
19. Implementing Agency (IA):
An exclusive Organization would be set up in due course, for implementation of
RKBY. Until such time as the new set up is created, the ‘GIC of India’ will continue to
function as the Implementing Agency.
20. Benefits expected from scheme:
The scheme is expected to:
1. Be a critical instrument of development in the field of crop production, providing
financial support to the farmers in the event of crop failure.
2. Encourage farmers to adopt progressive farming practices and higher technology
in Agriculture.
3. Help in maintaining flow of agricultural credit.
4. Provide significant benefits not merely to the insured farmers, but to the entire
community directly and indirectly through spillover and multiplier entire community
directly and indirectly through spillover and multiplier effects in terms of maintaining
production & employment, generation or market fees, taxes etc. And net accretion to
economic growth.
5. Streamline loss assessment procedures and help in building up huge and accurate
statistical base for crop production.
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
28
Annexure-B
Statement Showing Calamity Declared Areas
∗
Statement Showing Calamity Declaration by Government of Punjab During 2002
∗
Source: Office of Relief Commissioner, Govt. of Punjab
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
29
Annexure-B
Statement Showing Calamity Declared Areas
∗
Statement Showing Calamity Declaration by Government of Punjab During 2002
∗
Source: Office of Relief Commissioner, Govt. of Punjab
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
30
Annexure-B
Statement Showing Calamity Declared Areas
∗
Statement Showing Calamity Declaration by Government of Punjab During 2003
∗
Source: Office of Relief Commissioner, Govt. of Punjab
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
31
Annexure-B
Statement Showing Calamity Declared Areas
∗
Statement Showing Calamity Declaration by Government of Punjab During 2004
∗
Source: Office of Relief Commissioner, Govt. of Punjab
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
32
Annexure-B
Statement Showing Calamity Declared Areas
∗
Statement Showing Calamity Declaration by Government of Punjab During 2005
∗
Source: Office of Relief Commissioner, Govt. of Punjab
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
33
Annexure-B
Statement Showing Calamity Declared Areas
∗
Statement Showing Calamity Declaration by Government of Punjab During 2006
∗
Source: Office of Relief Commissioner, Govt. of Punjab
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
34
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
1
2
District
Total
R/F-2865/96
dated 07-0197
Entire
Tharparkar
1
R/F-3136/99
dated 22-0699
Thatta
2
Tehsil/
Taluka
Total
No. of
Village
Total
Except six dehs of barrage areas
viz Dodharo (ii) Bhitaro (iii) serhi
(iv) Phant of taluka Diplo and (v)
Naukot and (vi) Wassaipoto of
Taluka Mithi and three Tapas viz (i)
Kaplore (ii) additional Kaplore and
(iii) Dinore of taluka & District
Umerkot
Jati,
Reason
Crop
Season
Drought
4
Cyclone
Kharif 1999
Shah
Bunder,
Kharo
Chan,
Keti Bunder
Badin
Badin,
4
Talhar
Shaheed
Fazal Rahu,
Tando Bago
3
R/F-410
/2000 dated
06-06-2000
Sanghar
1
Khipro
1
Ranak
Dahar
Ranaha
2
Drought
21
Drought
Ranaha
4
R/F3147/2000
dated 23-052000
Dadu
2
Thana Bula
Khan
1
Desvi
Wahi Arab
Kalo Kohar
Takk
Makan
Toung
Bell Thap
Tiko Baran
Hathal Buth
Uth Palan
Babur
Band
Sari
Ganghiaro
Dhamach
Khoh
Tarash
Bachani
Thano Arab
Khan
Bhajoor
Batharo
Karchat
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
35
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
Crop
Season
Rani Kot
Pat karchat
Pokhan
Thatta
Thatta
1
Kohistan
area
Jungshahi
5
Kohitan 7/1
Kohitan 7/2
Kohitan 7/3
Kohitan 7/4
5
R/F3268/2001
dated 08-032001
Tharparkar
Sanghar
3
Mithi
44 Dehs
except 2
barrage
dehs
44
Diplo
37 Dehs
except 5
barrage
dehs
37
Chachro
40 Dehs
entire
taluka
40
Nagarparkar
38 Dehs
entire
taluka
38
Ranahu
2
Khipro
4
1
Drought
Ranak
Dahar
Mirpur
Khas
Umarkot
1
Dinore
25
Shekhro
Dhoodhar
Laplo
Mokhal
Beh
Horingo
Khalrai
Thar
Umerkot
Thar
Kharoro
thar
Bahrai Thar
Diatbeh
Janhero
Thar
Sinohi Thar
Sabhri Thar
Thar
Samon
Vehro Thar
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
36
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
Crop
Season
Nabisar
Thar
Rajar Thar
Rajari Thar
Sodori Thar
Kaplore
Soonhari
Lalabeh
Kachooli
Chhor Thar
6
R/F-342/2002
dated 14-062002
Tharparkar
13
Entire Distt.
Dadu
Entire Distt.
Thatta
Thatta
Drouht
8
Shah
Bander
Jati
Keti Bander
Mirpur
Sakro
Ghora Bari
Kharo
Ghhan
Mirpur
Bathoro
Mirpur
Khas
Unarkot
6
Pithero
Kunri
Kot Ghulam
Muhammad
Digri
Samaro
Badin
Badin
4
Tando Bago
Shaheed
Fazal Raho
Talhar
Ghotki
Mirpur
Mathelo
3
Ghotki
Khan Garh
Sanghar
Khipro
4
Sanghar
Sanjhoro
Jam Nawaz
Ali
Larkana
Sahdadkot
3
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
37
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Modian
35
Reason
Crop
Season
Warah
Qanbar Ali
Khan
Jacobabad
Jacobabad
3
Thul
Ghari
Khairo
Sukkur
Rohri
3
Saleh Pat
Pano Aqil
Khairpur
Nara
3
Faiz gunj
Mir Wah
Shikarpur
Shikarpur
2
Ghari Yasin
Karachi
Dehs of
defunct
taluka of
Malir
Taluka Malir
1
Jhang kand
Kond
Khar
Sherkand
Wankad
Insar
Bhad
Terari
Soondi
Jhunjhar
Meharjabal
Gadap
banderwah
Longheji
Karmatiani
Shering
Bolhari
Shahi Chib
Kathore
Chubar
Khaeji
Abdar
Bell
Amilane
Ghanghar
Pipri
Dhebegi
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
38
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
4
Breach
in Rohri
Kanal
Crop
Season
Koterie
Bakran
Konkar
Kherkharo
Tare
Thado
Khakhar
7
R/F- 786
/2002 dated
01-08-2002
Hyderabad
1
Matiari
1
Deh Bhiri
Deh
Luthrioo
Deh Wasan
Deh
Lakhisar
8
R/F-609/2003
dated 30-092003
Badin
3
Badin
(Entire)
5
Heavy
Rain
Tando Bago
(Entire)
Shaheed
Fazul Rahu
(Etire)
Talhar
(Entire)
Matli
(Entire)
Thatta
Jati (Entire)
9
ShahBander
(Entire)
Ghorabari
(Entire)
Kati Bunder
(Entire)
Kharochan
(Entire)
Mirpur
Sakro
Gharibabad
No.I
30
Gharibabad
No.II
Gharibabad
No.III
Gharibabad
No.IV
Khatikun
Kunno
Karkarnd
Makhiaro
Pat Mahro
Lakha
Moulapota
Dubo
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
39
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
Crop
Season
Sinhoro
Kalar
Sarkari
Masoodi
Dhandhi
Piniladho
Shah
Khaghan
Pumbri
Milko
Halathi
Ladu
VerhroJagir
Dandhro
Hanjtal
Kajri
Morajhar
Ghaghi
Rajwah
Balki
Mirpur
Bathoro
Moojri
25
Larhoharho
Layari
Kamaro
Junejo
Sandhanji
Kumhgadhi
Damri
Sonheri
Amra
Chelryoon
Kukrath
Karimpu
Parhiarki
Abral
Lakpur
West
Tarai
Charbati
Dalidal
Gunero
Hussanpur
Choubandi
Dachri
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
40
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
Crop
Season
Kutkia
Laikpur
Est.
Sajawal
Udhejan
19
More
Dadwah
Choubandi
Waso Shah
Dhambrolo
Budho
Talpur
Muradpur
Miranpur
Bollo
Khazano
Vikia
Bijoro
Layaro
Chachato
Kharar
Bhusta
Piniladho
Abad
Gul Bahar
Not
readable
Tharparkar
Diplo
(Entire)
33 Dehs
2
Mithi
Mithi
9
Pabohar
Lakhmiyar
Bhakus
Chaho
Jhun
Giryanchho
Naukot
Wassaipota
9
R/F3596/2004
dated 11-102004
Tharparkar
(Entire)
1
10
R/F3596/2005
dated 19-052005
Sanghar
2
Drought
Khipro
2
Ranaha
2
Drought
Ranak
Dahar
Umerkot
Umerkot
Dinore
25
Shekhro
Doodhar
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
41
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
Crop
Season
Laplo
Mokhal Beh
Horingo
Khalrai
Thar
Umerkot
Thar
Kharoro
Thar
Bahrai Thar
Diatbeh
Janhero
Thar
Sinohi Thar
Sabhri Thar
Thar
Samon
Vehro Thar
Nabisar
Thar
Bajar Thar
Rejari Thar
Sadori Thar
Kaplore
Soonhari
Lalabeh
Kachooli
Chhor Thar
11
R/F3697/2005
dated 19-122005
Tharparkar
1
Diplo
4
Mithi
Excluding
five above
mentioned
Dehs
Rain
Excluding
two above
mentioned
Dehs
Chachro
Nagarparkar
12
R/F-742/2006
dated 24-082006
Mipur
Khas
2
Mirpur Khas
3
Heavy
Rain
Sindhri
Hussain
Bux Mari
Sanghar
Sanghar
4
Snajhoro
Khipro
Jam Nawaz
Ali
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
42
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of Sindh During the Year 1997 To 2007+
S.
No
Notification
No and Date
13
R/F-749/2006
dated 25-082006
District
Total
Tehsil/
Taluka
Total
Umerkot
4
Umerkot
2
No. of
Village
Total
Reason
Crop
Season
Heavy
Rain
Samaro
Badin
Badin
3
Matli
Tando Bago
Thatta
Shah
Bander
4
KetiBander
Kharo
Chhan
Jati
Mirpur
Khas
14
i+
R/F-836/2006
dated 12-092006
Hyderabad
3
Kot Ghulam
Muhammad
1
Latifabad
2
Heavy
Rain
Qasimabad
Thatta
Thatta
1
Tando
Allahyar
Jhando Mari
1
Source: Office of Relief Commissioner of Sindh.
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
43
State Bank of Pakistan
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
1 855/81 dated 17- D.I. Khan
06-2000
Total
Tehsil/
Taluka
5 D.I. Khan
Total
Name of
Patwar Halqa
11 Shero Kahna
Chahkan
Shero Nali
Suthern
Circle
Daraban
Paharpur
No. of
Village
6
14
5
Kurai Mal
3
Zadani
6
Muryali
1
Gillati
2
Yarik
3
Girsar
2
Hissam
1
7
Malaki
4
Gara Shin Khan
8
Mithi
8
Fatah
1
Parom
1
Makkar
1
Mahrro
3
Mirran
6
Rammak
3
19 Saggu
Miankheli
4
Gandi Ashiq
3
Gandi Umar
Khan
3
Kikri
5
Kot Essa Khan
4
Kot Lalu
2
Drarban Kalan
1
Musazai
1
Shah Alam
1
Chaudhwan
1
Garra Tarkhoba
2
Kot Taga
3
Jandi
3
Bukhi
4
Garra Mat
2
Gur Wali
6
Fateh Ali
5
Kirri Shamozai
5
Hussana
5
5 Paniala Shamali
Paniala Junubi
Wanda Khan
Muhammad
Crop
Season
10 Drought
Potah
10 Ragpur Janubi
Reason
5
12
6
____________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
44
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Paharpur
(Kot Jai
Circle)
2 742/81- A dated
10-06-2000
Tank
D. I. Khan
Total
Name of
Patwar Halqa
Katta Khel
2
Rehmani Khel
6
3 Kirri Khaisur
Pakka
3
Umar Khel
Pakka
6
Lakki
Marwat
4 Lukki Saddar
TitterKhel Gul
Jan
Crop
Season
76 Drought
2
20
D. I. Khan
3 1064/81- A/92
dated 29-062000
Reason
6
Mali Khel Pacca
2 Tank
Kulachi
No. of
Village
49
14 Dallo Khail
1 Drought
Mina Khel
3
Sahab Khel
3
Dabak Mandra
Khel
1
Chowki Jand
JanubiTarf
Mehrdad
3
Mahal Palyana
2
Chowki Jand
Shumali
1
Abbassa
4
Landiwah
1
Mahal
Mushkana
2
Mir Azam
Michan Khel
3
Dadi Wal
3
Shamoni
Khattak
5
Ihsan Pur
1
14 DaulatTaja Zai
4
Adam zai
2
Tajori
2
Behrram Khel
2
Khero khel
Pacca
2
Pahar Khel
Pacca
2
Jabu Khel
3
Ghazni Khel
2
Kaka Khel
2
Titter Khel Gul
Jan
1
Langer Khel
Pacca
1
Tabi Murad
4
Masha Mansoor
4
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
45
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
Name of
Patwar Halqa
Shahbaz Khel
Lakki
Isak Khel
Cicle
Baisat Khel
15 Pezu
Swabi
3 Swabi
Gadoon
2
3
Jhang Khel
3
Abdul Khel
2
Maidanwah
2
Ahmad Khel
1
Daulat Khel
2
Isak Khel
1
Langer Khel
Hathi Khan
2
Begu Khel Tarf
Mandra Khel
1
Regu Khel Tarf
Achu khel
3
Nawar Khel
2
Mandra Khel
1
Aboba Khel
1
5 Bakhmal Ahmad
Zai
1
Bachkan Ahmad
Zai
1
Dharaka
1
Kot Kashmir
1
2
Naraji
6
Ghulaman
2
9 Dewel Garhi
Payan
6
Gani Chatra
Lahor
D.I. Khan
10 Cahkan
2
2
Malikabad
1
Gabasani
9
Mangal Chai
5
Qadra
7
Utla
5
2 jalabi
6 Cahkan
Potah
Rabi-992000/
Kharif-2000
10
Besak
Jalsai
5 247/81- A dated
08-05-2002
1
2
Jhanda
Gandaf
Crop
Season
2
Badni Khel
4 Pabini
Reason
2
Chunhar Khel
Passani
4 1521/81- A/92
dated 17-102000
No. of
Village
1
1
6 Drought
1st
July,2001
to 30th
June,2002
5
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
46
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
Name of
Patwar Halqa
Kuri(Mahal
Zandani
Yarik
No. of
Village
4
16
Sheru Kohna
10
4 Gillati
5
Yarik
5
Budh
1
Katch
2
D.I.Khan
1 Missan
2
Malana
4 Fateh Mahal
2
Paroa
4
Malakhi
3
Ramak
Mahra
Daraban
Chaudhwan
Kulachi
10
Rangpur Janubi
3 Miran
2
2
1
9 Suggu Mian
Khali
4
Gandi Ashiq
3
Gandi Umar
Khan
3
Kikri
5
Mahmood Pur
Dil
4
Garra Baran
2
Mussa Zai
1
Daraban
1
Shah Alam
1
7 Chaudhwan
1
Tarkhoba
2
Kot Tagga
3
Jandi
2
Bhukki
5
Garra Mat
2
Gur Wali
5
Fateh Ali
4
Kirri Shamozai
5
Mohana
4
15 Takwara Char
Nallah
Crop
Season
2
Shero Nau
Mithi
Reason
1
Takwara Nallah
Hussain Zai
1
Takwara Yaqub
Zai
1
Hathala
2
Gara Muhabat
2
Rorri
1
Noskor Nehara
2
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
47
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Beharpur/
Pani Circle
Total
Name of
Patwar Halqa
Looni
2
Moddi
1
Garra Janna
4
Kulachi Sharqi
1
Kulachi Gharbi
1
Garra Sardar
2
Zarkhani
2
Kot Daulat
2
5 Paniala Shumali
Paniala Junubi
Kot Jai Circle
6 321//81- A dated Tank
11-05-2002
7 341/81- A dated
11-05-2002
Bannu
Kundian
6
Rehmani Khel
6
Roddi Khel
2
3 Mali Khel Pakka
4
Mirri Khaisor
Pakka
6
Umar Khel
Pakka
6
19 Drought
31
Gomal
26
4 Gharbi Circle
9 Derdariz
2
Mama Khel
2
Bakka Khel
4
Takhi Khel
1
Nurar
1
Jani Khel
1
Hindi Khel
3
Barakzai Khel
4
Madev
1
2 Nar Shah Khan
Saddar Circle
2 Bizen Khan
Shirqi Circle
6 Aral-I
Umar Khan
4 Basit Khel
11 Drought
Haved
Nar jaffar khan
Lakki
Crop
Season
12
Wanda Khan
Muhammad
3
Reason
5
Dermiani
Kakki Circle
8 285/81- A dated
No. of
Village
1
8
1
1
1
Aral-II
1
Asperka-I
1
Asperka-II
1
Zaraki Pir Ba
Khel
3
Kjander Khan
Khel
2
15 wali
1st
July,2001
to 30th
June,2002
2 Drought
1st
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
48
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
10-05-2002
District
Marwat
Total
Tehsil/
Taluka
Total
Name of
Patwar Halqa
No. of
Village
Circle
Circle Isak
Khel
Circle Lakki
Sarddar
Reason
Crop
Season
July,2001
to 30th
June,2002
Darake
2
Bakhmal Ahmad
Zai
2
Bachkan Ahmad
Zai
2
Basit Khel
3
Kot Kashmir
2
Passani
4
Takhti Khel
3
Sultan
Mehmood
14
Zafar Mama
Khel
14
Mama Khel
4
Gandi Khan
Khel
3
Manji Wala
4
Paher Khel
1
Nar Muhammad
Naurang
9
14 Dara Pezu
2
Chuher Khel
2
Badni Khel
3
Jhang Khel
3
Abdul Khel
2
Maindwan
2
Doult Khel
2
Issak Khel
1
Langer Khek
Tati Khan
3
Begole Khel
Tarraf Achu
Khel
1
Nawar Khel
3
Mandra Khel
2
Abba Khel
1
14 Dallo Khel
1
Mina Khel
3
Shahab Khel
3
Dabak Mandra
Khel
1
Chowki Jand
Janobi Taraf
Meherdad Khel
3
Mehal Playana
2
Chowki Jand
Shomali
1
Abbassa
4
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
49
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Circle Titter
Khel Guli Jan
Total
Name of
Patwar Halqa
Landi Wah
1
Mahal
Mushkana
2
Mirazam Michan
Khel
3
dadi wala
3
Samoni Khattak
5
Ihsan Pur
1
14 Doulat Taja zai
4
Adam Zai
2
Tajuri
2
Beram Khel
2
Kheru Khel
Pacca
2
Paher Khel
Pacca
2
Jabo Khel
3
Ghazni Khel
2
Kaka khel
2
Titter Khel Gul
Jan
1
Langer Khel
Pacca
1
Tabi Murad
4
Masha Mansoor
4
Shahbaz Khel
9 399/81- A dated
13-05-2002
Kohat
2 Sharqi
Lachi
10 Dohda
Karak
3 Karak
Crop
Season
2
2
Kamal khel
2
Slab
3
Gumbat
2
Pershai
6
Khushal Garh
2
Chorlaki
2
Shadi poor
5
Ziarat Shekh
alladad
3
4 Lachi Summari
2
Khander Khel
6
Darmalak
6
8 Latamer
Reason
4 Drought
Shadi Khel
Malgin
10 229/81- A dated
08-05-2002
No. of
Village
1st
July,2001
to 30th
June,2002
7
2 Drought
Tappi Karak
2
Kanda Karak
3
Karak
1
Lakki Ghundaki
3
2001-2002
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
50
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
Name of
Patwar Halqa
Mitha Khel
Sabir Abad
Band Daud
Shah
11 361/81- A dated
11-05-2002
Hungo
3 Hungo
Doaba
Thall
5
Kando Khel
4
9 Dabbo
5
Jandari
3
Dhand Idal Khel
3
Deli Melahl
2
Kabir Killa
2
Shamshaki
1
Ghundi Mir
Khan Khel
6
Ghani Khel
6
Jatta Ismail Khel
8
Swabi
5 Swabi
2 Drought
Lodhkhel
3
Ibrahimzai
2
Kharsha
6
Hangu
1
Bandajat
5
Kotki
3
Togh
1
Barh Abbas
Khel
2
Muhammad
Khawaja
1
6 Samana
1
Kahi
1
Serozai
2
Torawari
1
Karbogha
3
3
1
Dallan
2
Minajee Khel
1
17 Swabi
Zaroobi
1st
July,2001
to 30th
June,2002
9
Naryab
4 Thall
Crop
Season
2
Talab Khel
10 Riasan
Reason
3
Tarkha Koi
Darsamand
12 267/81- A dated
10-05-2002
No. of
Village
1 Drought
1st
July,2001
to 30th
June,2002
1
Batakara
1
Shah Mansoor
1
Zaida
1
Panj Pir
1
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
51
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Topi
Total
Name of
Patwar Halqa
Saleem Khan
2
Pabini
2
Garr Munara
2
Jhanda
1
Marghuz Yar
Khel
1
Marghuz Aka
Khel
2
Kalabat
3
Tarakai
1
Turlandi
3
Narangi
6
Ghulaman
5
20 Topi
1
Baja
1
Maini
2
Bam Khel
1
Tand Koi
1
Kotha
1
Darra
3
Maneri Pyan
1
Maneri Bala
1
Kaddi
2
Sheikh Jana
1
Check Nodah
4
Karnal Sher Killi
1
Asota
1
Spen Kani
4
Parmoli
1
Shewa
1
Adina
1
Kalu Khan
1
Gandaf
Dewal
12 Bagai
Crop
Season
3
2
Ismaila
2
galla
1
Dewal Garhi
Payan
6
Gani Chatra
10
Besak
2
Malikabad
1
Gabasani
8
Mangal Chai
5
Qadra
7
10 Jehangira
Reason
1
Bahai
Utla
Lahor I
No. of
Village
6
3
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
52
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
Name of
Patwar Halqa
Jalbai
1
Matani Chgen
1
Mankai
1
Beka
2
Tano
3
Haryan
3
Hund
1
10 Yar Hussain
Zain
13 417/81- A dated
14-05-2002
Manshehra
6 Phulra
2
1
2
Sodher
4
Dobyan
2
Yaqoobi
2
Ambar
3
Jalsai
2
Lahor Gharbi
1
Lahor Sharqi
1
10 Phulra
8
Tharari
14
Mangal Doga
1st
July,2001
to 30th
June,2002
9
11
Lassan Nawab
5
Moharkalan
8
Peharana
4
Kala Maira
3
Sehki
4
Palsala
Crop
Season
1
Sard Cheena
Matsari
Reason
2
Tur Dher
Kunda
Lahor II
No. of
Village
10
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
53
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Icharian
Total
Name of
Patwar Halqa
Battai
7
Sachan Kalan
4
Panjool
2
Jabbar
1
Icharian
5
Bogarmang
8
Ahl
4
halkot
Baffa
14 381/81- A dated
14-05-2002
Haripur
4 Haripur
Khanpur
4
Lachimong
8
Baffa No. 2
2
Baffa No. 1
2
Nokot
3
Inayatabad
7
12 Darwash
5
Pandak
4
Ali Khan
6
Sarai Saleh
2
Kot Najibullah
3
Maqsood
7
Noordi
7
Bagra
4
Bandi Seeran
8
Kholian
6
Mang
4
Durushkhel
7
14 Bareela
Reason
Crop
Season
10
Jabbori
1st
July,2001
to 30th
June,2002
4
Bherarray
12
Garanthoon
10
Chajjian
Khalabat
No. of
Village
2
Hattar
6
Jabri
8
Najafpur
7
Tofkian
10
Choi
8
jab
3
Gandhian
2
Kharian
8
Halli
4
Khanpur
4
13 Behdarr
8
Bakka
4
Jagal
3
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
54
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Darband
Total
Name of
Patwar Halqa
No. of
Village
Behra
4
Jatti Pind
4
Panian
5
Mankrai
4
Makhan
4
Khalabat
4
Darri
2
Sarai Niamat
Khan
3
Noorpur Paswal
4
Pind Hashim
Khan
6
Kachi
4
Kakotori
Beer
Reason
Crop
Season
10
3
Swabi Maira
3
Pind Khan khel
4
Kharkkot
page missing
15 764/81- A dated
28-06-2002
Abbottabad
Kanungos
Havelian
Drought
1st
July,2001
to 30th
June,2002
Sherwan
Oresh
Bakot
16 783/81- A dated
28-06-2002
Malakand
Agency
17 3899/81- A
dated 02-092002
Swabi
Dargai
4 Swabi
Daiwal
Kharif
20001&
Rabi 200102
5 Ismailia
Darra
1
Shah mansoor
1
Jhanda
1
Zaida
1
4 Dagai
1
Gandaf
1
Malakabad
1
Ghahai
Lahor
1 Rain/ Flood One year
up to 30-62003
13 Dhobian
1
1
Khundha
1
Yaqubi
2
Sardcheena
2
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
55
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
Name of
Patwar Halqa
Anbar
18 3811/81- A
dated 31-082002
Peshawar
No. of
Village
Reason
Crop
Season
3
Jalbai
1
Yar Hussain
1
hund
1
Lahor Sharqi
1
Lahor Gharbi
1
Manki
1
Tano
1
Sodher
4
5 Kafoor Dheri
Rain/ Flood One Year
upto 30-062003
Methra
Shahib Bala
Panam Dheri
Gari Sher
Dad
19 3256/81- A
dated 26-052004
Mansehra
6 Daveli
Earth
quack
Jaburi
Bhogramang
Mahandri
Kewai
Hangrai
20 3726/81- A
dated 13-072004
Hungo
Thall
11 Rain
Rabi Crop
Dallan
Mianji Khel
Kandgha Sharif
Sorozai
Kahi
Mohammad
Khwaja
Togh
Barh Abbas
Khel
Kotki
Samana
21 4304/81- A
dated 10-092002
Mardan
3 Mardan
Chak Mardan
34 Rain/ Flood
Chatar Dheri
Hoti
Dagai
Baghdada
Sodam
Garhi Daulatzai/
Ismailzai
Kot Daulatzai/
Ismailzai
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
56
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
Name of
Patwar Halqa
No. of
Village
Reason
Crop
Season
Grayala-Bhai
Khan- Hosai
Gaddar
Hamza Khan
Fatma
Babeni
Char Banda
Kodinaka
Chak Toru
Shahbaz Garhi
Gujrat
Sawaldher
Jamal Garhi
Katti Garhi
Alo
Mian Khan
Kohi Barmol
Qasmi
Bakhshali
Beroch
Rori
Baghi Aram
Koragh
Mayar
Khora Banda
Allahdad Khel
Gumbat
Geedar
Surkh Dheri
22 303/81- A dated
10-05-2002
Chtral
(Whole
District)
Drought
Kharif 2000
& Rabi
2000-2001
Shangla
(Whole
District)
Lower Der
(Whole
District)
Buner
6 Daggar
gagra
Gadazai
Chamla
Totalai
Chagharzai
23 1589/81- A
dated 08-072005
Nowshera
3 Pabbi
Rian/ Flood
2005
Nowshera
Khairabad
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
57
Annexure-B
Statement Showing Calamity Declared Areas
Statement Showing Calamity Declaration by Government of NWFP During the Year 2000 To 2007#
S.
No
Notification No.
and Date
District
24 16337/ dated 20- Charsadda
07-2005
Total
Tehsil/
Taluka
3 Charsadda
Total
Name of
Patwar Halqa
No. of
Village
18 Prang Sado
Khel
Reason
Crop
Season
Rian/ Flood
2005
Earthquake
38574
Prang Safer
Khel
Mandori
Nissata
Chak Nissata
Agra
Jangal
Sheikh Killi
Sreh Bola
Gana Bola
Saboki
Dheri Zardad
Turlandi
Prang Yasinzai
Jamat
Sarwani
Sukur
Ghurambak
Shabqadar
11 Hajisai
Tarkha
Dalazak
rashaki
Norani
Mian Khel
Bela
Katozi Payan
Mu;a Khel
Marozai
Kharaqai
Utmanzai
2 Shahi Kolali
Dagi faizullah
25 1601/
EQ/PRC/2005
dated 03-102005
Abbottabad
Mansehra
Kohitan
Battagram
Shangla
26 2925/ 2007
dated 23-052007
#
Chitral
Rian/
Snofall
March &
April, 2007
Source: Office of Relief Commissioner, NWFP
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
58
State Bank of Pakistan
Statement showing Calamity Declaration by Government of Baluchistan During the year 2000 To 2006©
S.
No
Notification No.
and Date
1 280-7/2000 dated
May 09,2000
District
Chagi
Total
Tehsil/
Taluka
Total
No. of
Village
Total
23
Reason
Crop
Season
Drought
Kharan
Khuzdar
Kalat
Mastung
Loralai
Kila Saifullah
Pishin
Zhob
Kohlu
Lasbela
Musakhail
Barkhan
Sibi
Bolan
Jhal Magsi
Dera Bughti
Ziarat
Awaran
Turbat
Panjgur
Killa
Abdullah
Quetta
sub-tehsil
Panjpai
2
Kuchlak
Patwar Circle
2 280-7/99-2000 dated
July 24,2000
3 280-7/2002 dated
June 10,2000
Land tax, in
respect of
the
cultivable
land
situated in
the calamity
affected
areas of the
Province of
Baluchistan
Chagi
23
Drought
Kharan
Khuzdar
Kalat
Mastung
Loralai
Kila Saifullah
Pishin
Zhob
Kohlu
Lasbela
____________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
59
Annexure-B
Statement Showing Calamity Declared Areas
Statement showing Calamity Declaration by Government of Baluchistan During the year 2000 To 2006©
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
Crop
Season
Sibi
Dera Bughti
Ziarat
Awaran
Kech
Panjgoor
Killa
Abdullah
Gwadar
Kachhi
Nasirabad
un-irrigated
areas of
Tehsils
Chattar and
Tamboo
2
Quetta
Barshore
2 Augburg
7
Sariab
Saraghurgi
Patwar
Circle Baleli
Hana Urak
Mian
Ghundi
Kuchlaak
Patwar
Circle
Whole Union
Council
Zarkhoo with
its 9 Mouzas
Zarkhoo
Gharbi
8
Bojatal
Deh Balez
Sharqi
Hoshbal
Lais
Sheereenab
Takri
Chouki
4 280-7/2002 dated
June 11,2000
Land tax, in
respect of
the
caltivable
land
situated in
the calamity
affected
areas of the
Province of
Balochistan
5 280-7/99-2000 dated Chagi
January 17,2004
26
Drought
Kharan
Khuzdar
Kalat
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
60
Annexure-B
Statement Showing Calamity Declared Areas
Statement showing Calamity Declaration by Government of Baluchistan During the year 2000 To 2006©
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
Crop
Season
Mastung
Loralai
Kila Saifullah
Pishin
Zhob
Kohlu
Lasbela
Sibi
Dera Bughti
Ziarat
Awaran
Kech
Panjgur
Killa
Abdullah
Gwadar
Bolan
Jhal Magsi
Barkhan
Musakhail
Nasirabad
un-irrigated
areas of
Tehsils
Chattar and
Tamboo
Quetta
2 Augburg
7
Sariab
Saraghurgi
Patwar
Circle Baleli
Hana Urak
Miaan
Ghundi
Kuchlaak
Patwar
Circle
Whole Union
Council
Zarkhoo with
its 9 Mouzas
Zarkhoo
9
Zarkhoo
Gharbi
Bojatal
Deh Balez
Sharqi
Hoshbal
Lais
Sheereenab
Takri
Chouki
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
61
Annexure-B
Statement Showing Calamity Declared Areas
Statement showing Calamity Declaration by Government of Baluchistan During the year 2000 To 2006©
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
6 280-7/99-2000 dated
January 17,2004
Land tex, in
respect of
the
caltivable
land
situated in
the calamity
affected
areas of the
Province of
Balochistan
7 280-7/99-2000 dated Most
May 29,2006
severally
affected
Areas
Drought
Kharan
Crop
Season
16
Washuk
Chagi
Naushki
Panjgur
Kech
Gwadar
Awaran
Jhal Magsi
Bolan
Dera Bughti
Kohlu
Sherani
Zhob
Qamar din
Kareaz
1
Loralai
Loralai
1
Nasirabad
Chattar
1
Khanozai
2
Severally
affected
Areas
Sabi
10
Mastug
Kalat
Khuzdar
Lasbella
Musakhel
Killa
Abdullah
Pishin
Barshore
Quetta
Panjpai
1
Loralai
Mekhtar
1
Moderately
affected
Areas
Pishin
5 Pishin
1
Kila Siafullah
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
62
Annexure-B
Statement Showing Calamity Declared Areas
Statement showing Calamity Declaration by Government of Baluchistan During the year 2000 To 2006©
S.
No
Notification No.
and Date
District
Total
Tehsil/
Taluka
Total
No. of
Village
Total
Reason
Crop
Season
Burkhan
Ziarat
Zhob
©
Zhob
1
Source: Office of Relief Commissioner of Balochistan
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
63
Annexure-C
SALIENT FEATURES OF CROP INSURANCE SCHEME
CROP INSURANCE SCHEME
FOR THE BORROWERS OF THE SCHEDULED BANKS
NAME
CROP INSURANCE SCHEME
Participation
All Commercial and Domestic Private Banks involved in
Agricultural lending and Insurance Companies dealing in general
Insurance interested to participate in this scheme.
Eligibility
All borrowers receiving Agri Loan from participating Banks.
Mandatory
All participating banks involved in Crop lending are required to
make insurance compulsory and that all Agriculture production
loans disbursed by the said bank are compulsorily insured.
Declaration
The name of the farmer and his crop must be entered in the
Usher/Land revenue/ Jammabandi .The scheme will also be
applicable to tenants, lessees, etc.
Crops Covered
All crops shall be included in the scheme for the purpose of
insurance cover including;
a). WHEAT, b). RICE (Paddy), c). SUGARCANE,
d). MAIZE, e). COTTON, f) SUN FLOWER
Period Covered
The Insurance cover would be for the period from
Sowing/transplanting of the crop till it’s harvesting except in the
case of sugarcane crop where in addition to the above a specific
time period will also be prescribed.
Perils Covered
Indemnity would be payable on the happening of:
a. Natural calamities like Excessive rain, Hail, Frost, Flood, and
Drought.
b. Crop related diseases like viral and bacterial attacks, or any
other damage caused to the produce like locust attack etc.
Sum Insured
Sum insured will be based on the per acre borrowing limits
prescribed by the State Bank subject to a maximum of Rs.
2,000,000 per farmer per crop per season.
Aggregate Limit of
Liability
The maximum annual aggregate liability of the scheme would by
limited to 300% of the total premium
Premium
Maximum 2% per crop per season plus standard levies
Premium Payment
The bank will collect the premium from the farmers on behalf of
the insurance companies. For this purpose insurance companies
will open a collection account with the bank which will deposit all
premiums so collected on a weekly basis.
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
64
Annexure-C
SALIENT FEATURES OF CROP INSURANCE SCHEME
Indemnification
A valid claim under scope of cover will be payable subject to a
declaration of calamity in the area where the farm is located AND
when the final yield of the subject farm is less than 50% of the
reference of that region (area or thesil).
Reference yield is defined as the three (3) year average yield of
that particular region(area or tehsil). These three years will be
chosen from the five (5) preceding years, discounting the extreme
years that is the years with the best and worst yields during the
last three years.
Any partial losses not falling under the above category would not
be indemnified.
Indemnity payable would be subject to the Insured Crop being
situated in an area declared as “Calamity Affected” by the
Government (competent authority) and damage to the crop was
due to any of the insured perils subject to:
(i) The declaration is notified in the Gazette
(ii) The name of the farmer borrower and the insured crop shall be
entered in the usher/land revenue jammbandi at the
village/deh/chak level.
Payment of the
Claims
Claims shall be payable to the Banks by the insurers for credit to
the insured borrower loan account.
In any case the maximum amount payable would be the
outstanding loan amount or the assessed amount whichever is the
lesser.
Data Sharing
Banks shall make all the necessary arrangements, to facilitate the
Insurance Companies by providing them all the relevant data, as
desired by them.
Exclusions:
1.
Losses directly or indirectly caused by or arising from or in consequence
of or contributed to by war, invasion, act of foreign enemy, hostilities or
warlike-operations (whether war be declared or not), civil war, revolution,
riot, strikes or labour disputes civil commotion, usurped power, martial law
or state of siege or any events, or causes which determine the
proclamation or maintenance of martial law or state of siege.
2.
Any act of terrorism
3.
Loss due to avoidable causes such as neglect and / or malfeasance of the
insured/ members of his family his employees, poor farming practices or
failure to reseed or replant if it is possible to do so under the
circumstances.
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
65
Annexure-C
SALIENT FEATURES OF CROP INSURANCE SCHEME
4.
Loss due to mis-utilisation / non-utilisation of insured loan for the purpose
it was given.
5.
Earthquake, volcanic eruption or other convulsion of nature, subsidence,
landslide or erosion.
6.
Loss due to theft, malicious act or due to reasons and risks not specifically
covered by the policy.
7.
Losses occurring before attachment of risk or after harvest
8.
Any loss or damage arising out of measures taken by the government for
public interest.
9.
Price fluctuations (out put prices), and marketing etc.
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
66
Annexure-D
Presentation to Governor
CROP LOAN INSURANCE
DRAFT FRAMEWORK
To promote national welfare by improving
economic stability of Agriculture through a
sound system of Crop Insurance
BACKGROUND
„ ADBP Pilot Project with a private Insurer – 1986-1988
„ Various proposals by ADBP
„ IAP Crop Insurance Scheme to MOC – 1990
„ IAP Catastrophe Crop Insurance Scheme to SBP – 1990
„ IAP Crop Insurance Scheme (Flood/Excessive Rain only)
to MOC – 1996
„ NIC Comprehensive Crop Insurance Scheme - 1996
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
67
Annexure-D
Presentation to Governor
PAST SCHEMES
All the past schemes with the exception of the earliest
ADBP scheme had the following characteristics:
„ Pilot Projects with limited risks
„ Specified Crops
„ Specified Areas
„ Government Subsidies
„ High Premiums
INTERNATIONAL EXPERIENCE
„ State Involvement
„ Poor Experience
„ Obligatory for Loans
„ Limited Reinsurance
„ High Administration Costs
„ Lack of specialist knowledge
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
68
Annexure-D
Presentation to Governor
CURRENT SCENARIO
Limited coverages are being done by two private sector
insurers with specific banks.
It was felt by other banks and SBP that there should be
more interest from the other insurers.
Special Task Force was constituted by SBP under
chairmanship of Mr Zakir Mahmood, President, HBL.
CRITERIA FOR FUTURE SCHEMES
Keeping in view the past experience the following issues
needed to be addressed:
„ No government subsidies either as sharing of premium or
risk assumption
„ Scheme should cover all Pakistan
„ Cost Reduction
„ All Crops to be covered
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
69
Annexure-D
Presentation to Governor
PROPOSED CROP
INSURANCE SCHEME
„ PARTICIPATION: ALL commercial and private banks
excluding ZTBL and all Insurers registered with SECP
„ AMOUNT INSURED: Amount of loan subject to per acre
borrowing limit prescribed by SBP with maximum Rs
2,000,000 per farmer per crop per season
„ CROPS COVERED: All field crops excluding orchards
„ PERIOD OF INSURANCE: From time of sowing or
transplanting till harvesting
PROPOSED CROP
INSURANCE SCHEME
„ INSURED RISKS: Excessive Rain, Hail, Frost, Flood,
Drought and Crop related diseases like viral and bacterial
attacks or damage by locusts
„ DECLARATION: Name of farmer and crop must be
entered in the Usher/Land Revenue/Jammabandi at the
Village/Deh/Chak level.
„ PREMIUM: 2% of amount insured per crop per season
plus applicable levies (FIF 1% & FED 5%). Bank will be
responsible for collection and payment to the Insurer
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
70
Annexure-D
Presentation to Governor
PROPOSED CROP
INSURANCE SCHEME
„ INDEMNITY: Claims for damage directly caused by the
Insured Risks to be based on declaration of Calamity by
the competent authority (Provincial or Federal) in the area
where the insured risk is located and such declaration is
notified in the Gazette AND the final yield of the subject
risk is less than 50% of the reference of that area.
„ Indemnity is also subject to the name of farmer/borrower
and the insured crop has been earlier declared.
„ REFERENCE YIELD: Three year average yield of the
particular area. The three years will be from the five
preceding years discounting the best and worst years.
PROPOSED CROP
INSURANCE SCHEME
MAIN EXCLUSIONS
„ War, Civil war, Strikes, Riots, Terrorism etc
„ Non-utilisation or wrong utilisation of loan.
„ Earthquake or Volcanic eruption
„ Loss before risk declaration or after harvesting
„ Price fluctuations and loss of market
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Annexure-D
Presentation to Governor
PROPOSED CROP
INSURANCE SCHEME
SPECIAL CONDITIONS
„ Insurance to be mandatory for all loans with the Scheme
and not Voluntary
„ Declaration of Calamity
„ The maximum limit of liability of the Scheme in any one
year to be 300% of the Premiums for that year
„ Insurers reserve rights for review of terms annually
PROPOSED CROP
INSURANCE SCHEME
OPEN ISSUES
„ Premium Rate
„ Aggregate Limit of Liability
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Annexure-D
Presentation to Governor
Calamities
Punjab
„ Between 2002 and 2006 there have been 70 calamity
declarations
„ Affecting close to 10,000 villages
„ Number of farmers affected – Not Known
„ Resultant Amount of loan affected / written off - Not
Known
Calamities
Sindh
„ Between 2002 and 2006 there have been 10 calamity
declarations
„ Affecting close to 30 district; 84 talukas / Tehsils
„ Number of Villages affected – Not Known
„ Number of farmers affected – Not Known
„ Resultant Amount of loan affected / written off - Not
Known
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Annexure-D
Presentation to Governor
Calamities
NWFP
„ Between 2002 and 2006 there have been 22 calamity
declarations
„ Affecting close to 81district; 500 talukas / Tehsils
„ Number of Villages affected – Not Known
„ Number of farmers affected – Not Known
„ Resultant Amount of loan affected / written off - Not
Known
PROPOSED CROP
INSURANCE SCHEME
ISSUES
„ Premium Rate in relation to regional experience
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Annexure-D
Presentation to Governor
Crop Insurance – Regional
Experience
INDIA
„ Pilot Crop Insurance Scheme 1979 – 1984
– 2:1 Risk Sharing b/w GIC & State Government
– Insurance Premium ranged b/w 5% – 10%
– Covered 627,000 farmers.
– Premium generated IR. 19.700 million
– Claims IR. 15.700 million
Crop Insurance – Regional
Experience
INDIA
„ Comprehensive Crop Insurance Scheme 1985 - 1999
– 2:1 Risk Sharing b/w GIC & State Government
– Insurance Premium ranged b/w 1% – 2%
– Covered 76.300 million farmers.
– Premium generated IR. 4.04 billion
– Claims IR. 23.19 billion
– Claim Ratio 575%
– Burning Cost 9.29%
– Deficit rainfall accounted for 75 % of claims followed by
cyclones / flood 20 %
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Annexure-D
Presentation to Governor
Crop Insurance – Regional
Experience
INDIA
„ National Agriculture Insurance Scheme 1999 - 2006
– Risk Sharing – All claims in excess of 100% will be borne by
Central and State Government on 50:50 basis
– Premium rates - Kharif crops ranged b/w 2.5% – 3.5%
– Premium rates – Rabi Crops ranged b/w 1.5% – 2.0%
– Covered 78.98 million farmers.
– Sum insured IR. 755.81 billion
– Premium generated IR. 23.27 billion
– Claims IR. 72.18 billion
– Claim Ratio 322%
– Burning Cost 9.55%
Crop Insurance – Regional
Experience
SRILANKA
„ Crop Insurance on Commercial basis through Private
Sector Insurance Companies
„ Insurance Premium range b/w 9% – 13%
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Annexure-D
Presentation to Governor
Crop Insurance – Premium
Taxes
Non-Life premiums are subject to following levies
„ Federal Insurance Fee @ 1%
„ Federal Excise Duty @ 5%
„ Thus an additional 6% is added to the Premiums
PROPOSED CROP
INSURANCE SCHEME
ISSUES
Aggregate Limit of Liability
„ Catastrophic in nature
„ No State involvement
„ Limited reinsurance
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Annexure-D
Presentation to Governor
Aggregate Limit of Liability
„ Potential Premium Rs. 2 – 2.5 billion
„ Liability of Insurance Companies Capped at Rs. 6 – 7.5
billion
„ Based on the Average loan disbursed per farmer the
aggregate limit of liability will be sufficient to cater
between 80,000 – 100,000 farmers
Open issues
ALL may be reviewed
„ Data awaited as per formats submitted
„ Information on banks loaning procedure
„ Current flood losses
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Annexure-E
NICL Crop Insurance Scheme
NICL Crop Insurance Scheme
REINSURANCE
•
A STOP LOSS Reinsurance Cover is finalized under the lead of largest
and AA rated Reinsurance Company, namely SWISS RE, ZURICH.
•
Reinsurance Cover back up by 300- 500%
SBP Task Force - Report on Crop Loan
Insurance Framework
S#
SCHEME'S
PROVISIONS
AGRI-LOANS INS.
(NATURAL PERILS)
AGRI-LOANS INS.
(MULTI PERILS)
CROP INSURANCE
(SELECTED FARMERS)
1
ELIGIBILITY
AGRI-LOAN Borrowers of
Scheduled Banks
AGRI-LOAN Borrowers of
Scheduled Banks.
SELECTED FARMERS
2
PERILS COVERED
- Natural Perils
- Natural PERILS, Crop related
Diseases, Pest. - Fire, Theft Accidental death of Borrower.
- Natural PERILS, Crop related
Diseases, Pest. - Fire, Theft Accidental death of Borrower.
3
COVERAGE
All field crops / orchards
- All Field Crop / Orchards - Live
Stock (Rearing, milking or
fattening)
Selected Crops
4
SUM-INSURED
PRINCIPAL + MARKUP
PRINCIPAL + MARKUP
Pre-Determined Amount of S.I,
upto a Max. of Rs.2.00 Million
- Production Loans @ 1.50% of S.I,
plus Levies, per Crop Development Loans @ 1.50 %,
1.25% of sum insured plus levies,
plus Levies, per Annum - Live
per crop
Stock @ 1.75% Plus Levies per
head, per Annum
5
RATE OF PREMIUM
1.25 % of S.I plus levies, per crop
6
SCOPE
- Whole territory of Pakistan - Azad - Whole territory of Pakistan AZAD Jammu & Kashmir Jammu & Kashmir - Northern
Northern Areas
Areas
Selected Districts
7
DURATION
a) Crop sowing to harvesting %
tenure of the loan (whichever is
Sowing to harvesting of the crop /
earlier) b) Purchase of Live Stock
tenure of loan, which ever is earlier.
till its selling / tenure of loan
(whichever is earlier)
Sowing to harvesting of the crop /
tenure of loan, which ever is earlier
8
INDEMNIFICATION
(BASIS)
- Subject to Declaration of Calamity
- Subject to Declaration of Calamity Loss sustained by the Agri-Loan
- or Average yield (calculated for
and - yield less than 50% of
borrowers Crop due to stated Perils
past ten years % is less than 50%
reference yield of the region
or Declaration of Calamity
for the particular crop of the farmer.
EXCLUSION
Losses due to or caused by: 01.
War, Invasion, Revolution 02.
Volcanic Eruption, subsidence and
Erosion 03. Malicious Act 04. Price
Fluctuation 05. Measures taken by
the Govt. for Public interest.
9
Losses due to or caused by: 01.
War, Invasion, Revolution 02.
Volcanic Eruption, subsidence and
Erosion 03. Malicious Act 04. Price
Fluctuation 05. Measures taken by
the Govt. for Public interest.
Losses due to or caused by: 01.
War, Invasion, Revolution 02.
Volcanic Eruption, subsidence and
Erosion 03. Malicious Act 04. Price
Fluctuation 05. Measures taken by
the Govt. for Public interest.
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Annexure-F
Chairman NICL’s Letter to Governor SBP
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
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Annexure-F
Chairman NICL’s Letter to Governor SBP
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
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Annexure-G
NICL AGRICULTURAL LOAN INSURANCE SCHEME FOR NBP
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
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Annexure-G
NICL AGRICULTURAL LOAN INSURANCE SCHEME FOR NBP
___________________________________________________________________________________________________________
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Annexure-H
Crop Catastrophe Policy for The Bank of Punjab
CROP CATASTROPHE POLICY
OBJECTIVE OF POLICY
Crop sector contributes 50% towards overall Agriculture Sector of Pakistan and most importantly
it provides food and fodder for Livestock. Crop farming is exposed to vagaries of nature, such as
Floods, Droughts, Hailstorms, Windstorm, etc which are far beyond the farmers control.
Uncertainty of CROP yield is thus one of the basic risks which every farmer has to face. In view
of importance and indispensability of Crop Sector in overall Agriculture Sector, its protection is
inevitable which can be done through Crop Insurance.
BOP took the initiative to provide Insurance coverage to Crops to safeguard the interest of the
farmers as well as of the Bank. It provides them with a buffer against the harsh economic
conditions which inevitably follow the failed crops resulting in the crop growers failure to repay
the loan.
CROP CATASTROPHE POLICY
ELIGIBILITY:
All farmers receiving production loans from BOP.
PARTICIPATION:
All BOP Borrowers availing Input Loan.
CROPS COVERED:
All field CROPS for which the Bank is advancing input loans to its borrowers.
PERIOD COVERED:
From planting (sowing) till harvest i.e. Standing Crop.
COVERED:
Excessive Rain, Floods, Drought, Hailstorm, Cyclones and Insect/Pest attack.
In Life Coverage Premature, Accidental and Natural Death of the borrower.
SUM INSURED:
Amount of Input Loan lesser of Rs.500,000/- or the outstanding amount of loan including markup (up to the amount shown on the Certificate/Policy)
EXTENT OF COVER:
subject to the clause that the Insurance Company will issue Catastrophe CROP Insurance Policy
with indemnification of losses insured CROP falls in an area declared as ‘Calamity Area’ by the
Government and requiring no subsidy
INDEMNIFICATION AND COMPENSATION:
INDEMNIFICATION
When the insured CROP falls in an area declared by the competent authority i.e.,
Federal/Provincial Government OR local revenue authorities as Calamity affected, Company will
pay 100% of the amount disbursed/utilized by the insured farmer up to the time of declaration of
Calamity to the BOP. Crop means standing Crop before harvesting.
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Annexure-H
Crop Catastrophe Policy for The Bank of Punjab
COMPENSATION:
Crop Losses 25% or more will be compensated as follow:
I. In addition to the fulfillment of the above condition as a condition precedent to pay
ability of the loss, Certificate of “Fasal Kharaba” issued after the consensus of the
representative of the Insurance Company, ACO and the representative of the Bank to the
extent of 50% damage to the losses to the Crop or 75% less yield against reference yield
of the area which ever is more. The Compensation will be maximum equal to 100% of
the outstanding loan.
II. Identified losses from 25-50% will be compensated as 50% of the outstanding loans.
PROCEDURE OF SETTLEMENT OF CLAIM FOR CROP CATASTROPHE POLICY:
In case of any claim in respect of this Crop Catastrophe insurance Policy, the entertainment of
claim by insurance company will be subject to furnishing the following documents:a) Intimation letter from BOP within 72 hours, giving complete detail of the incident.
b) Original and/or attested copy of the notification by the Government (competent
authority) in the gazette declaring the effected area as calamity or notification/certificate
by the local revenue authorities.
c) The document showing the name of the farmer and the insured crop has been entered in
the ushr/land revenue jamabandi at the village/teh/chak level.
d) Copy of Insurance Policy issued by EWI from the date of initial loan grant.
e) Computerized Loan statement showing date-wise detail of loan disbursement,
recoveries and mark-up activity with dates duly attested by the concerned BOP Branch
Manager and countersigned by an Authorized Officer of the Agriculture Credit
Department at the BOP, Head Office, Lahore. This statement should be from the date of
original loan grant to the borrower.
f) Photocopy of the application and/or agreement between the borrower and the Bank duly
attested by the BOP Branch Manager.
g) CNIC copy of the borrower/claimant.
h) Any other documents to establish the incident attracting the loss under the policy.
After the completion of documents by BOP, the Company will issue following documents to the
Bank for the issuance of claim cheque:1.
Acceptance letter.
2.
Loss Voucher.
3.
Claim Form.
4.
Any other relevant documents.
5.
After receiving the above documents from the Bank, the Company will issue the claim cheque not
later than 15 days. In the event of any dispute arising between the parties in respect of any
claimable amount under the policy the same shall be referred to the Arbitrators to be nominated
by BOP and Company shall settle the claim accordingly. Company reserves the right to
investigate all claims submitted by the BOP.
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Annexure-I
Scheme of Askari Bank Limited with M/s United Insurance Company of Pakistan Limited
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
86
Annexure-I
Scheme of Askari Bank Limited with M/s United Insurance Company of Pakistan Limited
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
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Annexure-I
Scheme of Askari Bank Limited with M/s United Insurance Company of Pakistan Limited
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
88
Annexure-I
Scheme of Askari Bank Limited with M/s United Insurance Company of Pakistan Limited
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
89
Annexure-I
Scheme of Askari Bank Limited with M/s United Insurance Company of Pakistan Limited
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
90
Annexure-I
Scheme of Askari Bank Limited with M/s United Insurance Company of Pakistan Limited
___________________________________________________________________________________________________________
SBP Task Force Report on Crop Loan Insurance Framework
91
Annexure-I
Scheme of Askari Bank Limited with M/s United Insurance Company of Pakistan Limited
___________________________________________________________________________________________________________
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Annexure-J
List of Members
SBP Task Force on Crop Loan Insurance Framework
Sr.
#
Name
Designation
1. Mr. Zakir Mahmood
Chairman
STATE BANK OF PAKISTAN
2. Mr. Muhammad Ashraf Khan Secretary
Director
3. Mr. Kamran Akram Bakhshi Coordinator
Joint Director
FEDERAL GOVERNMENT
4. Raja Abdul Hameed
Member
Economic Consultant
5. Dr. Waqar Malik
Member
Chief Scientific Officer
6. Mr. Shoaib Soofi
Member
Director Insurance Division
PROVINCIAL CHAMBERS OF AGRICULTURE.
7. Ch. Muhammad Nasir Cheema Representative of
President
Farmers/ Growers
Association
8. Syed Qamaruzzaman Shah
Representative of
President
Farmers/ Growers
Association
9. Mr. Abdur Rahim Khan
Representative of
Vice President
Farmers/ Growers
Association
INSURANCE COMPANIES
10. Mr. Naved Yunus
Insurance Specialist/
Chairman
Representative of IAP
FINANCIAL INSTITUTIONS
11. Mr. Amir Siddiqui
Banker
SEVP / Group Chief Executive
12. Mr. Muhammad Mansha
Banker
SVP
13. Mr. Tassaduq Hussain
Banker
Chief Manager
14. Mr. M. Farooq Abid Tung
Banker
Country Head ACD
15. Mr. Moazzam Maneka
Banker
Head Agriculture
16. Mr. Kashif Umar Thanvi
Banker
Head Rural Finance
Institution
President, Habib Bank Ltd.
Agricultural Credit Department,
State Bank of Pakistan
Agricultural Credit Department,
State Bank of Pakistan
Ministry of Food, Agriculture &
Livestock (MINFAL)
Pakistan Agricultural Research
Council (PARC)
Securities & Exchange
Commission of Pakistan
Chamber of Agriculture (Eivane-Zarat), Punjab,
Chamber of Agriculture, Sindh
Sarhad Chamber of Agriculture
East West Insurance Co. Ltd.
National Bank of Pakistan
Zarai Taraqiati Bank Ltd.
Punjab Provincial Cooperative
Bank Limited.
Askari Bank Ltd.
The Bank of Punjab
Habib Bank Limited
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Annexure-J
List of Members
Sub-committee and Working Group of
SBP Task Force on Crop Loan Insurance Framework
Sr.
#
Name
1. Mr. Amir Siddiqui
SEVP / Group Chief Executive
Designation
Chairman
Sub-committee
Institution
National Bank of Pakistan
STATE BANK OF PAKISTAN
2. Mr. Muhammad Ashraf Khan Secretary
Director
Agricultural Credit Department,
State Bank of Pakistan
3. Mr. Kamran Akram Bakhshi
Joint Director
Agricultural Credit Department,
State Bank of Pakistan
Coordinator
INSURANCE COMPANIES
4. Mr. Saifuddin N. Zoomkawala Insurance Specialist
Managing Director
EFU General Insurance Ltd.
5. Mr. Mahmood Lotia
Sr. Deputy Managing Director
Insurance Specialist
EFU General Insurance Ltd.
6. Mr. Khurram Nasim Ghuman Insurance Specialist
Senior Executive Vice President
EFU General Insurance Ltd.
7. Mr. Pervez Yunus
Executive Director Operations
Insurance Specialist
East West Insurance Co. Ltd.
8. Dr. M.M. Syed
Chief Agronomist
Insurance Specialist
East West Insurance Co. Ltd.
9. Mr. Riaz Hussain Shah
General Manager (Punjab)
Insurance Specialist
East West Insurance Co. Ltd.
10. Mr. Tinku I. Johnson
Executive Director
Insurance Specialist
Adamjee Insurance Company
Ltd.
11. Mr. Yahya Hamid
Chief Information Officer
Insurance Specialist
Adamjee Insurance Company
Ltd.
12. Mr. Tahir Ahmed
Managing Director
Insurance Specialist
New Jubilee Insurance Co. Ltd.
13. Mr. Akbar D. Vazir
Executive Director
Insurance Specialist
New Jubilee Insurance Co. Ltd.
14. Mr. Azfar Arshad
Senior Vice President
Insurance Specialist
New Jubilee Insurance Co. Ltd.
15. Mr. Muhammad Iqbal
Vice President (Reinsurance)
Insurance Specialist
New Jubilee Insurance Co. Ltd.
16. Mian M.A. Shahid
President & CE
Insurance Specialist
United Insurance Co. of Pakistan
Ltd.
17. Mr. Saleem Shaikh
Executive Director
Insurance Specialist
United Insurance Co. of Pakistan
Ltd.
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Annexure-J
List of Members
Sr.
#
Name
Designation
Institution
18. Mr. Muhammad Imran
Relationship Manager
Insurance Specialist
New Hampshire Insurance Co.
19. Mr. Khalid Hamid
CEO
Insurance Specialist
UBL Insurers Ltd.
20. Mr. Rehan Fahim
Insurance Specialist
UBL Insurers Ltd.
FINANCIAL INSTITUTIONS
21. Mr. Tariq Jamali
SEVP
Banker
National Bank of Pakistan
22. Mr. Farooq Ahmed
Vice President
Banker
National Bank of Pakistan
23. Mr. Niaz Ali Malkani
Officer
Banker
National Bank of Pakistan
24. Mr. Muhammad Mansha
SVP
Banker
Zarai Taraqiati Bank Ltd.
25. Mr. Tassaduq Hussain
Chief Manager
Banker
Punjab Provincial Cooperative
Bank Limited.
26. Mr. M. Farooq Abid Tung
Country Head Agri. Credit
Banker
Askari Bank Ltd.
27. Mr. Moazzam Maneka
Head Agriculture
Banker
The Bank of Punjab
28. Mr. Kashif Umar Thanvi
SVP
Banker
Habib Bank Limited
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